If you're still mulling over New Year's resolutions, here are a few to consider: spend less, save more and repair bad credit.
Main-taining a good credit report can translate into quicker loan approvals, competitive interest rates and a strong financial foundation. A few simple steps can help repair bad credit.
Pay on time
Most importantly, do your best to pay your bills on time. Making timely payments ensures a positive payment history, which creditors weigh heavily when they make lending decisions.
Check credit reports
Review your credit reports periodically and take quick action to address any disputed or incorrect information. It's important to address any inaccurate information on a credit report. Federal law requires each of the nationwide credit reporting bureaus - Equifax, Experian and TransUnion - to provide one free credit report per year to borrowers who request a copy of their report.
The credit reporting bureaus must provide the borrower with everything in his or her credit report and a list of everyone who has requested the report within the past year.
Under the federal Fair Credit Reporting Act, both the credit bureau and any organization responsible for reporting inaccurate information must correct errors for incomplete information on credit reports.
Write a letter
If you discover errors, send a written dispute letter to both the credit reporting bureau and the creditor who filed the information.
Dispute letters should very specifically describe the facts and circumstances surrounding the mistake.
Include copies but not originals of any supporting documentation, such as receipts, statements that verify payments and a copy of the inaccurate credit report.
Circle or highlight each error on the report, and include a detailed explanation why the information is inaccurate.
Send your dispute letter by certified mail, return receipt requested, so you can document that the credit bureau and creditor received the correction request. And be sure to keep copies of the dispute letter and any enclosures.
What's next
Once a credit bureau is notified of a dispute, it must investigate the items in question, unless it considers the dispute to be frivolous. The credit bureau also must forward all relevant data the borrower provided about the inaccuracy to the appropriate creditor.
The creditor must review the dispute and report the results back to the credit bureau. If the reporting creditor discovers the disputed information is inaccurate, it must notify all three credit bureaus so corrections can be made to the information in the complainant's file.
Once its investigation is complete, the credit reporting bureau must notify the borrower of the results in writing. If the dispute led the credit reporting bureau to correct the mistake, the bureau must also provide the borrower a free copy of the corrected credit report.
Keep in mind that a corrected credit report does not count as the borrower's annual free report.
Put it in the file
If the credit reporting bureau's investigation does not resolve a borrower's dispute, the borrower may request that a statement of the dispute be included in his or her file and in future credit reports.
Borrowers may also ask the credit bureau to provide the dispute statement to anyone who previously received a copy of the report. Credit bureaus may charge a fee for this service.
If a credit reporting agency or creditor refuses to correct inaccurate, incomplete or outdated information on your report, you can file a complaint with the Texas Attorney General's Office, www.texasattorneygeneral.gov, or with the Federal Trade Commission, www.ftc.gov.
