Menu Close

How to Fix (or Deal with) Bad Credit

This is an introduction (a very basic overview) on how to repair a consumer credit file. More detailed steps and methods will be the topic of future articles.

I found something on my credit report – what do I do?

If you found either erroneous or fraudulent information, you have every right to dispute your file online and have the problem investigated. Count on it taking 30 days for the dispute process to run its course. The results of the investigation will then be mailed to you upon completion.

Should I pay off an old account that has already been assigned to a collection agency?

The only way it is ever suggested that you pay an outstanding collection account is to get the collection agency to agree to completely remove any and all information pertaining to the account from the credit bureaus in exchange for a full and final payment – needless to say, this should be agreed upon in writing.

Now if they don’t want to agree to this, here is something to think about: The Fair Credit Reporting Act (FCRA) only allows an outstanding creditor obligation (such as a collection account) to remain on a consumer’s file for no more than seven years from the last date of activity (e.g. a payment or credit being initiated by the consumer). So – hypothetically – if you never make a payment, the account will eventually be removed from your credit file as if it never existed. Interesting, huh?

Okay, but I need to move in the next couple of weeks… What can I do to immediately improve my credit rating?

There are actually several things you can do, but only one of them is recommended and practical at this point – the others would require a lengthy dissertation on how to repair your credit, which will be shoehorned into its own separate set of articles.

So without getting into sophisticated negotiation techniques and repair tactics to achieve a favorable account rating, this more practical approach can be accomplished by everyone… It doesn’t matter what type of negative payment history you have on your personal credit report. Whatever it may be, there is an easy way to handle it – as simple as this may sound you must do the following:

  1. Before applying for a place to rent, you must first obtain the most recent copy of your credit report. If you haven’t already done so, get all three for free at – the only unfortunate thing is that if you already took advantage of your rights under the FACT Act for this year, you’re now forced to pay a fee in order to view the most recent version.
  2. After receiving the latest copy of all three credit reports, you must make a list of every derogatory account that appears on your record – whether it’s late payments, collections, or whatever.
  3. Okay, this is it! This is where you can make your amends (at least to your prospective landlord). No snake oil or dog and pony show required – All you need to do is prepare a letter (don’t worry – nothing too formal, but definitely sincere) which openly discloses every derogatory account you have, the reason why the negative remark occurred and what steps you have taken (or are taking) to correct the problem.

Sure, it may seem a little ridiculous and simplistic… but it works!

Regardless of whatever may have you so anxious and worried, the majority of landlords really do appreciate when their potential tenants are open, honest and sincere, especially about all of the bad stuff.

Landlords hate nothing more than accepting a rental application, only later to discover that the prospective tenant’s meager admission of “minor credit problems” actually meant a heck of a lot more! Show the landlord that you are aware of your mistakes – even though there is always that possibility that they may not pull your credit report – and yes, believe it or not, there are still a few of them out there that don’t bother to run a credit check. But I wouldn’t bet the bank on it…

So don’t dismiss this tactic! Chances are, you’ve probably never tried it and you’ll be surprised how effective it can be – on many different levels. Of course, there are never any guarantees, but most of the time you should be approved – though perhaps with additional contingencies (e.g. a little extra security deposit). But at least you got exactly what you wanted – a new place to settle your ’stead…