How to do credit repair the right way

What is Credit Repair?

Without sugar coating it, credit repair is the process whereby a consumer hires a third party company to act as their proxy and attempt to get negative information removed from their credit reports.

The companies that provide these services are formally referred to as “Credit Repair Organizations” by the Credit Repair Organizations Act (hereinafter referred to as “CROA”), the Federal law that controls their advertising, billing, and contractual activities.

The traditional strategy of a credit repair organization is to send dispute letters to the credit bureaus challenging the validity of negative items.

Their hope is that either the credit bureau or the party furnishing data to the credit bureau (a lender or collection agency) drops the ball and doesn’t get the offending credit entry validated within the requisite 30-day period, and then has to remove it. If the item is validated as accurate the credit repair organization will simply re-dispute the item and the process starts over.

What to Do For Fast Credit Repair?

1. Try a Credit Builder Loan

A credit builder loan is a short-term loan that you can use to establish credit. These loans are offered by banks and credit unions and they’re typically for a small amount, usually no more than $1,000.

Instead of actually getting the cash in hand, it’s parked in an interest-bearing account. Once you pay the loan off, you’ll get the money back along with any interest earned. Not only that, but you’ve also built up a positive payment history in the process.

2. Get a Secured Credit Card

A secured credit card is a stepping stone to building credit. With this kind of card, you have to put up a cash deposit to get a card.

You can use a secured card to build credit, but they’re not hassle-free. These cards tend to charge higher interest rates and fees compared to a traditional credit card so you need to make sure to review the rates and costs carefully before you settle on one.

3. Ask to Be an Authorized User

An authorized user is someone who has charging privileges on someone else’s credit card account, like a parent or a spouse. You get your own card with your name on it and you can reap some positive credit benefits even if you don’t use it.

The reason? The original cardholder’s account history for the card will get transplanted onto your credit report. If they’ve always paid on time and kept the balance low, it’ll help to bump up your score.