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Many consumers have received mailings or seen messages in their e-mail inbox proclaiming, "Repair your credit and get approved..." Certainly the number of so-called "credit-repair companies" or "clinics" has grown rapidly. These companies are targeting unsuspecting consumers by promising to clean up negative, but truthful, information on a credit report to obtain a home mortgage, auto loan or credit card-and they charge hefty fees for these services.
What many desperate credit seekers don't realize is that these organizations often cannot perform the services they advertise-and in some cases are conducting illegal activities.
TransUnion, a leading consumer credit reporting company, is working to help consumers avoid these scams, which are not worth the associated risk and potential long-term headaches. Instead, credit seekers are advised to obtain a copy of their credit report on their own so that they can improve their credit independently for little or no charge. With a credit report in-hand, consumers can easily correct any errors at no cost to them beyond the stamp to mail the documents.
While negative information that is accurate must legally remain on a consumer's credit report for a specific length of time, consumers can legally improve creditworthiness by:
• Remembering to pay all bills on time. Delayed or delinquent payments lead to late fees, more interest charges and overall reduced credit health.
• Applying for a department store card or gasoline credit card, which are often easier to qualify for-and then paying those bills on time to help re-establish good credit.
• Maintaining a small number of credit cards. Creditors look at your potential for going on a spending spree and falling too deeply into debt.
• Keeping your debts at a reasonable level. Financial experts say that, as a rule of thumb, non-mortgage debt payments should not exceed 10 to 15 percent of your take-home pay each month.
• Avoiding unnecessary inquiries on your credit profile. Any time you authorize a creditor or other business to check your credit report, an inquiry is added to your report. If you have a large number of inquiries in a short amount of time, this could look bad to creditors.
In the absence of these six behaviors, nothing else-not even so-called "credit repair companies" -can make you appear more creditworthy. In many cases, time is the only thing that will heal a record of past credit problems. But the sooner consumers get started on the path to a healthy credit profile, the better.
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