5 Reasons That You Should Always Dispute Bad Credit

Dispute Bad Credit

Credit scores can affect the loans we are eligible for, the rates we get, and even the amount we end up spending in the long run on big ticket items.  Because of this, it is important to always know what your credit report is and how you can improve it.  If you happen to get a bad credit on your credit report, you can dispute it.  These are the 5 times you should always dispute bad credit.

Dispute the bad credit if there is an error in the credit file.

This can mean anything from the wrong name being listed, the wrong address, or even an incorrect amount being charged.  If the creditor does not have these very basic things listed correctly then there is a high chance that their records are not good and that the charge is not accurate.  If this is the case then they may not be able to prove that the debt is yours and it will be removed from the credit report.  This tends to be the case most often with older debts because they might have been bought and sold multiple times so it is best to start with those debts first and check to see if all of the information that they have listed is correct.

Dispute the bad credit if the debt is past the federal credit reporting period. 

There is only a certain amount of time that debts can be listed on your credit report.  Once that time has lapsed, they have to be removed and if they have not been then you can dispute the bad credit and have it taken off of your credit file.  This holds true even if it is a debt that you still owe.  Most debts have a federal credit reporting period of 7 years but some can be up to 10 years.  To find out how long each particular type of debt can stay on your credit report you can contact a credit repair counselor or credit repair specialist.

Dispute the bad credit if the debt is listed incorrectly.

Let’s say that a debt is listed at 30 days late when it was in fact only 5 days late.  If you have proof of this, then you can dispute the bad debt and help to bring up your credit score.  While having a missed payment of any kind can still hurt your credit score, it hurts a credit score much less if a debt is 30 days late rather than being 90 or 120 days late.  Keeping accurate records of your debts and payments can help you to quickly catch any debts that are listed incorrectly and can mean helping your credit score.

Dispute bad credit if you are a victim of identity theft.

Having someone steal your identity can mean that they have opened up accounts in your name without your permission.  This can have a very negative impact on your credit score.  If you file a report with the police, you can dispute any bad credits that occurred as a result of identity theft.

Dispute the bad credit if you think the debt might not be yours.

If you see a debt with a company that you are not familiar with listed on your credit report and believe that the debt isn’t yours, then dispute it.  The creditor will have to be able to verify that the debt is yours or they will have to remove it from your credit report.  It is your consumer right to dispute bad credits that you do not believe are yours so make sure you keep an eye on your credit report to catch these false credits as soon as they are reported.

How Bad Credit Can Affect You

Bad Credit

Credit scores are used to determine if you qualify for a loan, how much interest you will pay, what your loan terms will be, and whether or not you can get insurance.  While those who have bad credit are still able to qualify for loans, they will most likely pay a significantly higher interest rate than those who have a good credit score.  Having a bad credit score will also affect what type of loans you are eligible for.  For instance, if you have a very low FICA score, then you will most likely not qualify for a standard vehicle loan and will instead have to take out a special loan that can have extremely high interest rates, additional fees, and other stipulations.  This can wind up costing you thousands of dollars extra than if you were to take out a loan for the same car and have good credit.  This is just one example of how having bad credit can affect you.  Here is a list of the pitfalls that can come with having bad credit.

Bad Credit Could Mean Higher Financing Rates

Most big ticket purchases such as cars, houses, or even televisions are often paid for with a loan.  The rate of these loans is determined by your credit score.  If you have a good credit score, then a company will have more faith that you will pay back your loan and reward you with a lower interest rates and better loan terms (such as a longer loan or a clause that allows you to pay if off early without any penalty).  If you have bad credit then these loan lenders believe that lending to you is a risk and will make it more difficult for you to obtain a loan.  They will most likely charge you a higher interest rate and might even tack on additional fees to obtain the loan.  They could also make you put down collateral that can be taken away from you to secure the loan.

Bad Credit Could Mean Having Higher Down Payments

If you are looking to purchase a home or other big ticket item you might get penalized for having bad credit by having to put down a higher down payment.  The lender doesn’t believe that you will pay back the loan if you have bad credit, so they can reduce their risk by having you put down a larger down payment.  This could make it more difficult for you to get a loan if you do not have the additional cash.

There are many long term effects of having bad credit.  A person with bad credit will end up having to pay significantly more for an item (both in the form of a higher down payment and with higher interest rates) than a person who has good credit.  This can make it difficult to get future loans because all of your cash is tied up into the loan that you currently have and can diminish your overall quality of life. I would suggest one of the credit repair companies, read our Lexington Law Reviews.

Best Credit Repair Options

Best Credit Repair Options

Having a good credit score can save you hundreds or even thousands of dollars over having a bad credit score. If you have made poor choices that have affected your credit score negatively there are options that you can do to help repair your credit score. You can choose to repair your credit on your own or you can use a credit repair company to help you repair your credit. Here are the steps to take with both of the best credit repair options.

Steps to take if you are Repairing Your Credit Yourself

Repairing your credit can often be very time consuming and it will often take a long time before you see any improvement to your credit score. The very first thing that you will want to do if you are repairing your credit yourself is to obtain your credit report from all three of the credit reporting agencies. The three credit reporting agencies are Experian, Equifax, and TransUnion. Legally, you are entitled to get at least one free credit report each year from each of the agencies so this shouldn’t cost you any money. You can also get a free credit report if you have recently been denied credit during a credit application. Doing this will help you know exactly what is on your credit report and what things are negatively affecting your credit score.

After you have gotten your credit reports, make a note of any of the items that have incorrect information. Anything from incorrect amounts owed, incorrect dates, or incorrect addresses can be considered incorrect information and will be used to help you dispute the debts later. You will also need to get any documentation that you might have which proves that the information reported is incorrect. Be sure to make copies of each piece of documentation that you have so that you can send those in along with a dispute letter for the credit reporting agencies which have the bad debt listed. Be as specific as possible in your dispute letter as to why you are disputing the debt and highlight any proof that you might have to make the dispute process quicker. If there are multiple cases where the bad debt is incorrect then you will need to send one letter for each debt that you are disputing.

In addition to this, write the company that claims you have the bad debt and ask them for verification of the debt. If they cannot submit proof of the debt, then they will be forced to remove the bad debt from your credit report. If the creditor does not respond to your letter within 30 days, then the credit bureaus will have to remove the negative item from your credit report.

Once bad debts have been removed from one credit bureau, check to be sure the bad debt is also removed from the other agencies.

Steps to Take to Repair Your Credit with the use of a Professional

When looking at the best credit repair companies, the first step you will need to take if you are using a credit repair company will still be to get your credit reports. Then you will still want to make a note of any disputes that you might have and gather up your documents that support your reason for disputing the bad debt. Then you will want to find a credit repair company that has a good reputation and is well established. After you have done this, the credit repair company will do the rest of the work for you.