The good news is, once you’ve settled all your debts, you’ve already done most of the work in repairing your credit. Your debt to income ratio, which we discussed earlier, is now looking much better. This alone will help your credit but there are other steps you can take to help rebuild your credit.
IMPORTANT NOTE: DO NOT use a credit repair clinic or service, they are mostly scams.
30 days after your final settlement, run credit reports for all 3 bureaus and make sure your information is correct. Dispute any negative entries using the following steps:
- Determine incorrect items
- Send dispute letter to bureau in question
- Keep records of letters
- Follow up if you don’t receive a response in 30-45 days
- Obtain resulting credit report from bureau (they will send it to you)
- Repeat as necessary
This is really all there is to it. You can also add some positive account history on your account by having someone with good credit co-sign with you on a loan or by signing up for a secured credit card which you should use for small monthly purchases and pay off in full at the end of each month. Either of these will leave positive entries on your report.
IMPORTANT NOTE: DO NOT close down old accounts with positive history, this will only hurt your credit.
You can expect to regain a good credit standing in 1-2 years with these steps.
