When you know your credit is damaged, it's easy to assume that all of those reasons are because of mistakes you made. Even so, there may be items being reported to the credit bureaus that are errors or may indicate identity theft.
A 2012 study by the Federal Trade Commission (FTC) found that 1 in 5 consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed on at least one of their three reports. The same study also found that 20% of consumers who had their errors corrected saw an increase in their credit score, resulting in better interest rates when they applied for a loan.
The Path to Credit Recovery
Having a car is a necessity for many, and that need doesn't simply come to a halt because your credit is damaged. The team here at Drivers Lane knows this, and we wanted to provide you with some information that will help you not only get back on track, but also help you keep it that way.
Check your credit reports to ensure accuracy
Start by getting a copy of your credit report from each of the three CRA's - Experian, Equifax and TransUnion. Carefully examine them for any accounts or addresses that are being reported in error. You can acquire one free copy of your report from each of the three CRA's annually, and there are services out there that will allow you to monitor your credit reports on a regular basis free of charge or for a small monthly fee. We recommend that you first acquire your reports from AnnualCreditReport.com, the government-mandated site run by the major CRA's, to ensure you are getting the most accurate information possible. Once you have the reports in hand, check for the following:
- Accurate personal information (Social security number, birth date, full name and addresses of where you lived.)
- Are all of your known accounts present and accounted for?
If you see anything out of the ordinary, don't hesitate to contact the agency that is reporting the error. And if you see blemishes that are in fact accurate, prepare a plan to fix those problem areas.
Keeping Your Credit on the Rails
Once you have identified and made the necessary fixes to your report, your credit score is sure to improve. In order to keep it that way, be sure to pay on time (which accounts for 35% of your score) and be responsible with your available credit. Credit utilization (30% of your score) is the second most important factor (after paying on time) in the calculation of your rating. So, keep your balances low by not using any more than 30% of your total available credit on your revolving lines.
Secondly, know what you should do in the event that any of your cards are lost or stolen.
- Backtrack. Where did you last use your card?
If you think you know where you last used it, either return to the place you left it, or contact them to see if they still have the card. If they do, ask them to keep it in a secure location until you can retrieve it.
- Some card companies can temporarily "freeze" your card.
If you are unsure of the whereabouts of your card, contact the card issuer and see of they can deactivate it until you find it. If you cannot locate the card, inform your issuer so they can send you a replacement.
- Update your information with any autopay services.
If the card that was lost or stolen was being used for any automatic bill paying services, be sure to update the information in their systems to prevent missed payments that can hurt your credit as well as incur additional fees.
- Keep an eye on card activity and your credit report.
Whether you misplaced the card and found it, or it was indeed stolen, be sure to monitor your credit reports to ensure that no fraudulent activity has taken place. If you discover any such activity, report it to your card issuer immediately.
You Still Need a Car
If you are still in the early stages of getting your credit back in shape, your car buying opportunities may not be as limited as you think. Drivers Lane helps bad credit car buyers get connected with dealerships that work with lenders who will do everything possible to get you approved for a car loan that works within your budget. Our online application is simple, fast, secure and of no obligation to you. Start today and we will find the local area dealer that can help you.