Consumers
REPAIRING YOUR CREDIT

There are many ways to encounter credit problems, not the least of which is falling victim to identity theft or being enticed by the numerous low-interest credit card offers in the mail. This information highlights some key steps to cleaning up and repairing your credit. It is not intended as legal advice.

BEGIN BY TAKING ACTION. The task may be daunting, but everyone agrees that repairing your credit starts by taking action. As you begin, be aware that there are no instant fixes and no one can "erase" your bad credit. Only your deliberate effort, correction of errors and good practices involving prompt payment of bills over time can rebuild your credit.

CHECK YOUR CREDIT HISTORY. Checking your credit report regularly for errors and having misinformation corrected immediately can minimize surprises. There are three main nationwide credit bureaus that compile credit report information. This report is the picture of your credit situation given to lenders who decide whether to approve your loan and others who may be reviewing you for such things as employment. By law, you are entitled to a free credit report:

• Once every 12 months from Equifax, Experian and TransUnion, the three nationwide consumer credit reporting agencies. One way to make the most of this opportunity is to order a report from just one of the three credit bureaus, then wait four months to order a report from another and, four months later, order a report from the third credit bureau. By repeating this process annually, you can monitor your credit report regularly, at no cost. The three credit reporting companies have created a centralized system for ordering a copy of your report.
• If you have been denied credit, insurance or employment and request the report within 60 days of notice.
• If you are unemployed and plan to look for a job within 60 days.
• If you are on public assistance.
• If your report is inaccurate because of fraud; you have been a victim of identity theft; or have placed a security alert in your credit file because of identity theft.

DISPUTE INCOMPLETE OR INACCURATE INFORMATION. You have a right to dispute incorrect information and have your file corrected. If unable to resolve the dispute, you can ask to have your explanatory note included in your file and distributed to those requesting your credit history. To dispute information in your credit report with the nationwide consumer reporting agencies - Equifax, Experian and TransUnion:

• Tell the consumer reporting agency, in writing, what information you think is inaccurate and provide copies (not originals) of documents in support. Keeping good records is important since information unverified within a reasonable time must be deleted.
• A consumer reporting agency must investigate the items in question - usually within 30 days - unless it considers your dispute frivolous. They must provide you with the name, address and phone number of the information provider, and forward all relevant data you provide to the information provider.
• Disputed information that cannot be verified must be deleted from your file. Incomplete information also must be completed, such as a record of late payment that fails to show you were no longer delinquent. The consumer reporting agency must give you the written results of the investigation and a free copy of your report if the dispute results in changes. (This free report does not count as your annual free report.)
• The consumer reporting agency must notify the other nationwide credit reporting agencies so their files can be corrected. Any disputed item changed or deleted cannot be put back in your files unless the information provider verifies that it is accurate and complete. If you request, the consumer reporting agency must send notices of any correction to anyone who received your report in the past six months.
• If an investigation does not resolve your dispute, you can ask the credit reporting agency to include a written statement about the disputed information in your file and have your notice included any time information from your file is furnished.

REPAIRING YOUR CREDIT. Paying down your current credit card balances will go a long way toward repairing your credit rating. Again, don't believe the promises of quick-fix credit repairs since there is no instant solution. Here are some things to consider:

• If you are having problems repaying your loans, contact your creditors to discuss options. It is better to be upfront than to avoid payments altogether. Generally, once an account goes to a collection service, the credit card company will not be able to work with you. Instead, you will be causing more damage to your credit rating.
• If arranging a repayment schedule with any creditor, make sure before any payment is made that you have a written agreement that your account will be reported as current, paid off and never late.
• If you need help working out a payment plan and a budget, contact your local credit counseling service. There are non-profit groups in every state that offer credit guidance to consumers. These services are available at little or no cost. Also, check with your employer, credit union, or housing authority for no-cost credit counseling programs.
• Know how much you owe on your credit cards. If you have multiple card balances close to their limit, concentrate on paying them down before charging more. According to one rule of thumb, lenders may be hesitant if your debts reach 75% of your credit limit.
• If you are paying high interest rates on your current credit cards, consider a debt consolidation loan with a lower interest rate that could be easier to manage as single regular payments. You also might consider transferring high-interest payments onto another credit card with a lower interest rate, but avoid playing musical chairs with the balances that could create deeper debt.
• Avoid applying for many credit cards over a short period since a lot of inquiries in a short time can look bad and affect your credit rating. This doesn't mean you shouldn't shop around for the best loan deals for cars or other large purchases, but you might want to minimize applying for the many promotional credit card offers received in the mail. As long as your inquiries for an automobile or mortgage deal are all within a 30-day period, many credit scoring programs and creditors will disregard the multiple inquiries or consider them as a single inquiry.
• Close inactive or old accounts. Lenders generally look at your total debt potential so having inactive or old accounts could present a problem in getting a new loan.

COMPLAINTS. If you believe your rights have been violated by a consumer reporting agency, you can file a complaint with the Attorney General's Public Inquiry Unit. If the information you provide indicates a problem, we may contact the reporting agency. You can send us an online complaint using the link on our consumer information web page.

• You also can file a complaint with the Federal Trade Commission, which enforces the Federal Fair Credit Reporting Act. You can use the FTC online complaint form or contact the FTC Consumer Response Center, Washington, DC 20580-0001; telephone at 1(877)-FTC-HELP.

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