If you’ve never checked your credit history before, you probably are in the dark about a number of details regarding your personal finance history. A credit history isn’t just a story that tells how you’ve used your money in the past; it’s also a roadmap that explains how things are likely to go in the future. If you have poor credit history, chances are you will not be able to borrow money according to your terms. When you do receive a loan, it may be more expensive than you would like to pay. Finally, a poor credit history may take you out of the running when it comes time to compete for a new job or a new house. In these situations, personal credit history is often the differentiator between otherwise similar individuals.
If you have been using credit for some time, it’s negative items on your credit report that are dragging your credit history down. You can see these by accessing your credit report at AnnualCreditReport.com, a free resource made available by the government. Here you will see a record of times you messed up. Perhaps you forgot to pay a water bill for a couple of months. Perhaps you applied for several loans in a short period of time, making you look desperate for money. Whatever the case, it’s these negative items that you must remove if you are to improve your standing.
We’ll use a simple example to explain: a credit account sent to collections because you failed to pay it back. Companies send accounts to collections for a couple of purposes. They may have a deal with the collections company to pay them if they recover a certain amount of the debt. Or the original debt-holder may have sold your debt to collections, and the collector simply wants to recover more money from you than the price they paid for your debt.
To get a collections charge off of your credit report, you have several options. First, you’ve got to understand what you’re working with. Check your credit history and take note of the negative items listed there. You have a number of options from this point.
If you want to improve your credit score fast, you should first consider 1) paying the debt, and/or 2) disputing the negative item. When you dispute, the credit reporting agency is obligated by law to verify the debt, bringing together every record of the debt from every organization that has had a hand in its recording. This is time-consuming, and it might just not be worth it, so this may cause your item to disappear with no more effort on your part. On the other hand, if the debt is high enough, disputing the item may remind the debt-holder that you exist, and that you know about the debt. This may cause them to renew the hunt for you and your money.
You could also wait for seven years for the item to leave your credit history. You may not have time for this, but if you do, it’s a good way to absolutely scrub your history of negative items. However, in the meantime your credit will be worse than it would otherwise be.
Leave a Reply