How Long It Will Take to Repair Your Credit History
Do you need to carry out credit repair and want to know how long it will take?
There are no hard and fast rules or ways in which you can repair your credit quickly. There isn’t a super-fast remedy for fixing your credit history. The time it will take varies depending on your particular, specific financial situation. The extent of your difficulties and how badly they have affected your credit rating and, in turn, your credit history, will play a major role here.
Some people manage to get their credit history cleared up in a matter of months, but others may require a number of years – working hard to take the necessary measures to repair their credit. Luckily for you, we at AutoLoanSolutions are here to give you a comprehensive guide on credit repair that is bound to help!
Does negative information stay on my credit report forever?
Any bad-looking information such as negative payments, or collections of debts and any delayed or tardy payments will be visible on your credit report for up to seven years. More severe bankruptcies, known as “chapter 7 bankruptcies” can remain on your credit report for up to ten years!
The effect of the negative information on your credit repair will tend to diminish as the years go by, but serious states such as collections or “charge offs” will be more difficult to bounce back from than the case of simply missing the odd payment here and there. But there are paths to take which will help to repair your credit history as quickly as possible.
What is “chapter 7 bankruptcy”?
This form of liquidation or bankruptcy is a type of bankruptcy that is used to eradicate a number of unsecured debts. It can be the case that you are really behind with paying your bills and you simply do not have the funds to make the required monthly payments or even cover your living expenses. If you then file for “chapter 7 bankruptcy” it can help to clear away debts and press the reset button on your personal finances.
That said, you will probably have to give up a few of your possessions. It also has a very sustained negative effect on your ability to obtain credit – your “creditworthiness”.
So, where do I start on my path to repairing my credit?
The key thing here is to establish how creditworthy you are. You need to have a good payment history in order to be deemed creditworthy.
The assumption here is that you’ve already started to pay off any of your outstanding debts or bills and that you’ve initiated the process of getting your due accounts more up to date. If you haven’t embarked on this road, then you certainly need to consider this your first step.
The next factor is establishing your utilization rate. So, we’re assuming you have several credit cards and you’ve used up the limits on some of them? Then you really need to work out what your credit card utilization rate is. This is carried out by dividing the credit card balance by the credit limit (entering the credit card balance on your calculator, dividing it by the credit card limit and then pressing the “equal” button. You keep this figure on the display and then multiply the result by 100. The result is then your utilization figure seen as a percentage.
It makes sense that you need your utilization rate to be as low as possible. So reduce or pay off any balances that you have on your credit cards so you can see a positive effect on your credit report and subsequent scoring.
Credit rating agencies often say that your utilization rate needs to be no greater than 30%. The less the better – of course. A higher rate of utilization often indicates that:
- You are either not earning enough money in order to settle your bills or debts
- You are not considered to be responsible with your finances
- You’ve pretty much lost the handle on your finances and you’re no longer in control of them
- You’ve made some rather negative decisions where money is concerned.
Take special note of the factors that affect your credit score
In addition to paying off balances or bad debts and ensuring that your accounts are current and not in arrears, you might want to think about obtaining a copy of your credit score.
When you obtain a copy of your credit score, most agencies will provide you with a list of the key issues that are negatively affecting your scoring.
Our credit history is unique to us, so it really does pay to note the factors that are causing you to have such a bad history and the need for a credit repair. This list can help you to obtain a better grasp of your finances and help you to better your credit over time.
The credit report will also usually provide you with information about your payments, loans, debts, or accounts that you might even have forgotten about.
Also, if you were previously married or had accounts in joint names with somebody else, you might even get a shock when you see some payments that you didn’t even make yourself.
We all have to face our demons, and understand what the issue is before we can remedy it, right? So obtain a copy of your credit report and then you can start to address the situation. Some agencies let you download your credit report online. This could take about half an hour to log in, respond to the security questions posed and then get cracking with the download. If you’ve not requested a credit report before, it could take a few hours to review your reports (there are usually three) in full.
If you discover any mistakes on your credit report, you can also have them remedied. The Federal Trade Commission will give you information about how to start correcting your credit report and, in turn, pave the way to repairing your credit history. So get in touch with Equifax, Experian or TransUnion, and let them know that you’ve found a mistake on your credit report. You’ll need to pen some dispute letters and some credit agencies will expect you to provide additional documentation or proof to back up what you’re saying. If you do establish the error, they will then launch an investigation. This will all take a few hours or so – but it really depends on the number of disputes, and if you’re handling this on your own. It is possible to pay a credit repair service to do all this for you – they’ll help you get it done as soon as possible.
Having submitted your disputes to the relevant agencies, this is where you have to wait for the official processes and red tape to be addressed. It’s usually the case that the credit agency has thirty days in which to contact the creditors, substantiate the information that you have provided, and respond to your query. You might find sending your letters to them by registered post would be useful. That way you can have evidence of when you posted them. Some agencies also give you the option to upload your disputes or complete an online form.
You have to be aware that it can take a little while to have your error(s) remedied. And there’s no 100% certainty that it’ll even be corrected, but you know at least that you’ve tried to get the situation sorted out and you’re treading a positive path towards credit repair. Some creditors or accounts may not be happy to rectify or delete the report, but you can then request that the reporting agency in question (Experian, Equifax or TransUnion) adds a note on your report explaining that you do not agree with the entry. This information can sometimes help to give lenders a bit more ammunition in order to approve your loan application and accept your lower scoring – either way, it’s worth trying.
It can be the case that the agency will require even more information from you. This will of course involve some toing and froing while the relevant paperwork is gathered and the creditors are contacted again. The agency will have to remedy each dispute individually, as there is no blanket email or letter that can be sent out to all the creditors at once.
It could be that you have to submit more than one dispute letter. If there are numerous errors on your credit report, it pays to send off individual letters containing each dispute – as this will get the ball rolling more quickly for each issue.
Generally speaking, a credit repair can take between two and six months – this includes establishing the validity of the dispute and then resolving the dispute(s) accordingly. If you have just a few errors on your report, you might find that you’ve completed the process in just a month or so. This would of course be a more favorable situation.
Is there anything I can do while I’m waiting for the agency to repair my credit report?
Your credit repair is really just one stage – the first, usually – in the process of developing a better overall credit score. Although correcting your credit report may take a few months, the actual time taken to then rebuild your credit into a healthy state can take a lot longer. In some cases it can take in excess of a year to come out the other end with a good credit rating.
To make this whole process move along much more quickly, you can take the initiative to develop credit while you’re having the items deleted through your credit repair procedure. To do this, you need to remember to manage your payments and any debts, build up a really positive-looking payment history, and then ensure that your credit card debts are reduced sufficiently so as to keep that all important credit utilization ratio right down.
This is how you can go from a bad credit score to a fab credit score. This whole process requires patience and persistence. It may be that you’re wanting to apply for a loan for a home. If this is the case, you’ll need to factor in six months to a year for your credit repair to take effect and for you to have a favorable credit history. Patience here will really pay off, as this will make sure that you have the necessary time to get the credit you actually need before you put in that all important credit application with your chosen lender.
Will a credit repair service do the job any quicker?
Hiring a credit repair service can help to ease the burden and make the whole process seem a lot more understandable, however the schedule for the procedure doesn’t really differ all that much. It’s just that most of the work is being carried out by the agency, and so you don’t have as much worry or paperwork to complete.
An initial consultation with an agency would usually last around half an hour. During this meeting you’ll authorize the agency to obtain your credit reports and to carry out the necessary disputes for you. They will then do all that they can do, and call upon you to provide any additional information or paperwork that could be needed. The agency will keep you up to speed as the procedure continues, and they will usually notify you accordingly as each dispute is remedied.
The whole process will still take up to six months to complete. This of course depends on how many disputes you are submitting. We find that most consumers will complete their credit repair process within six months, but you might be one of the lucky ones with fewer disputes to remedy, so it could take just a few months.
Going forward, the main thing is to keep a good eye on your credit score, repairing it as and when necessary, and following our guide. It is possible to repair your credit history, but it does take patience. Contact us today for more information.