Having a credit problem is serious business, and fixing that problem should be done in a business-like manner.  Picking up the phone and yelling at the lender’s customer support representative is not going to help repair your credit; in fact, it may make it worse.  Writing a concise, professional letter may well be the first step to doing the job and we’ll talk about that later.

These are serious “do it yourself credit repair tips”.

Did you find inaccuracies on your credit report?
You can raise your credit score by having inaccurate or negative information removed from your credit report.  Write to the credit bureau that is distributing the bad information, and spell out exactly why the data should be deleted from your report.  For example you may have paid off a loan that your report shows as outstanding!  In such cases it is advisable to always include any copies of proof you may have, such as cancelled checks showing timely payments. 

Another effective way to build your personal credit is to add new, positive accounts to your credit report.  When you add new accounts, your high credit limit (the total credit available to you) will be increased.  This is a big hit with potential lenders and no doubt the “pre-approved” offers will start arriving in your mailbox.  Your goal, of course, is to earn better credit as reflected in a higher credit score. 

As with many things in life, there’s a catch-22 situation lurking round the corner.  In order to GET good credit, you usually must HAVE good credit.  However, there are ways for those of us with less than good credit ratings to add new credit accounts to our files. 

Method #1: Secured credit cards.
This is a good but somewhat limited way to build credit.  Secured credit cards are usually easy to get, in terms of approval.  But, they require cash up front (the amount of the card) as a “secured” deposit.  So your money is tied up in the deposit until you either close the card or convert it to an unsecured card after you’ve built your good credit history.  The unsecured credit cards typically have lower credit limits-often the amount of the deposit.  These are not the most effective way to add to your high credit limit, but at least you won’t be running up a credit card bill you can’t pay.

Method #2: Sub-prime merchandise cards. 
This is a card attached to a line of credit that allows you to buy merchandise from a specific vendor (usually the company that sold you the card).  In most cases, you buy the goods through a catalog or online mall.  While there are some ’shady” operators offering sub-prime cards, the legitimate ones can be helpful.  Here is how it works:  you buy $1,000 of merchandise.  You put down $300 cash, and finance $700 on the sub-prime merchandise card, and make payments.  Your credit line will be reported to one or more of the major credit bureaus, thereby increasing your high credit limit. 

The sub-prime cards are easy to get, and if you maintain a good payment history with them, you’ll soon receive pre-approved credit offers.  Note:  don’t confuse merchandise cards with sub-prime credit cards!  Sub-prime credit cards have very low credit limits and require a large fee upfront to open.

Method #3:  Authorized user accounts. 
Adding a family member or friend as an “authorized user” on an existing credit card account has long been used as a way to establish credit. Many parents add their children as authorized users in order to help them build their credit history.  It benefits the “authorized user” since they now share the glow of the good credit rating of the original card holder. 

However, there’s some not-so-good news.  The creators of the FICO credit scoring system (Fair Isaac Corporation) announced they are changing the way their scoring models treat credit card accounts that belong to authorized user cardholders.  This comes as shifty credit repair organizations were selling “authorized user” account access to consumers with credit problems. This credit repair loophole was part of the motivation for the FICO score change.  

And now we talk about how a simple credit repair letter can also help you repair your credit.

It is a fact. You can reduce your debt by negotiating repayment plans with your lenders, in writing.  Debt negotiation letters can help you settle your debts, and erase bad credit, for a fraction of what you currently owe.  Your lenders will always want to recoup some of their losses, as opposed to having to write off all your bad debt.  A simple letter can be very powerful in reducing the amount of money you owe, and perhaps avoid bankruptcy for you.

A well-crafted letter can also stop collection agencies and attorney debt collectors from harassing you.  It is your right to not be called in the middle of the night or while you are at work.  These companies sometimes “buy” your debt from the original lender, for a percent of the value.

The impact of your credit repair letters will not be instantaneous.  But in a month or so you will likely find that your credit report will reflect the requested changes or that your lenders are negotiating in good faith with you to reduce your debt.  Keep in mind that you are repairing not only your credit, but also your good name and reputation.