University of Illinois Extension

Build a New Credit Record

People have credit problems for many different reasons. Job loss, unexpected medical bills, divorce, or money management mistakes can all cause problems with credit. You can take steps to reestablish your credit no matter why you have credit problems.

Check Your Credit Report

When you apply for credit, the lender receives information in a credit report from one or more of the credit reporting agencies. The credit report includes a statement of your bill payment history, current unpaid bills, available credit, property liens, lawsuits, and other related information. Credit reporting agencies try to give accurate information but they can make mistakes. When you're having trouble getting credit, the first thing you should do is check the accuracy of your credit report. If you're turned down for credit by the lender, you should receive a letter with the name of the credit reporting agency that provided the negative credit report. You're entitled to a free report if you've been turned down for credit within the last 60 days. Otherwise, you can get a free credit report once every year from each of the three credit reporting agencies.

When you get your credit report, check for mistakes. Common mistakes include information about someone with a similar name, information for an ex-spouse's account that your name was never on, or a closed account shown open. If there are any errors, write the credit reporting agency that issued the report. State the error and ask for an investigation. The credit reporting agency legally has 30 days to investigate and correct the information. The credit reporting agency can't remove negative information if it's correct. Generally, negative information stays on a credit report for seven years. Bankruptcy information stays on a report for ten years.

Some groups advertise that they can repair your credit report. Be careful! These groups can't do anything that you can't do. A consumer protection law requires that a credit repair company give you your legal credit rights in writing. Also, the company can't collect any money from you until it has finished the work it said it would do for you.

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