Credit Repair: Making Bad Credit History

By: Akhil Shahani

As a new business owner, you'll be looking for funding from outside sources to help you get your business started. Potential sources of funding include banks, venture capitalists, friends and family, credit card advances and other lending institutions. These funding sources will want to look at your business' credit history.

Since a new business will, obviously, not have one, it is your personal credit history that will be evaluated. This will not only determine whether you receive the funding, it will also have a direct bearing on the interest rates applied to the loan or business credit card that you receive.

Well, what happens if you have a bad credit history? Typically, you will end up paying way more interest on your loans than someone with a good credit history. You may also find it difficult to obtain funding at all. What can you do in a situation like this? Is there any way that you can improve your credit worthiness?

The answer lies in credit repair and it should be an important preparatory step in your business planning. Credit repair refers to the practice of improving or rehabilitating one's bad credit.

To begin repairing your credit, do the following:

?Get A Copy Of Your Credit Reports: Credit reports are provided by credit bureaus or credit agencies. The three major credit bureaus- Equifax, Experian and TransUnion - maintain a national database of an individual's credit history. Get a copy of your credit report from all three of them.

Once you obtain your report, review it very carefully to see if there is any old or erroneous information in your file. If there are any outdated entries of bad credit, they can be removed. Credit reporting agencies cannot retain negative information for an excessive period of time - the typical period is 7 years.

?Dispute Errors: Once you have gone through all the entries in your file and found errors, you can contact the credit reporting agencies and request deletion of the erroneous entries from your report. Keep all your correspondence with the credit companies and agencies so that you have proof of the requests. Keeping a record will help you track the same errors should they reappear in your file. Action is taken within 30 days and if the credit bureaus determine that your request is genuine, they will remove the relevant items from your report.

In their eagerness to repair their bad credit, many people fall prey to the scams that are now available online. Often, they end up doing further damage to their credit profile. Following are some points that you need to keep in mind while trying to get your credit repaired:

?If you already have a bad credit history, avoid signing up for any new credit cards. If you are still getting credit card offers despite your bad credit records, avoid them, for they are most likely to be scams.

?Do not turn to one of the many companies that say they will erase your bad credit for a price. The only one who can permanently remove an entry from your records is the credit bureau or the creditor.

Remember, credit repair is not an overnight process. It takes time and discipline. However, it can be done and if you are serious about owning a business, then take the necessary steps to improve your credit worthiness.

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