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Credit Restoration Handout

How to Turn Bad Current Debts Into a Positive Credit Rating

Approach your creditors and negotiate repayment plans that earnestly demonstrate your ability to make regular payments. In response, your positive credit rating can be restored. Here's the strategy:

• Collection Agency Accounts – Deal with the creditor
  If you are contacted by a collection agency for payment of a debt, a good first-step is to contact the original creditor first. When you deal with the creditor you usually have more flexibility to negotiate time or amount of payment. A collection agency receives a percentage of what they collect from you so they try to collect as much as they can. The creditor, on the other hand, may not expect full payment. And your future business may also be important. However, be aware that creditors can refuse to deal with customers after an account has been turned over to an attorney or collection agency.
  
  The collection agency is usually more difficult to negotiate with. If you cannot avoid negotiating with the collection agency, the following suggestions for dealing with creditors can also be used for effectively dealing with the collection agency.


• Make an offer they can’t refuse
  Suggest a payment schedule in exchange for a corrected credit entry, for example. Or, agree to pay what you owe in monthly installments if the creditor agrees to improve your credit rating. Be direct. Be specific.
  
  You could suggest that after a certain number of on-time payments, your negative rating will be raised to a non-rating, and then after several more timely payments, the non-rating will be lifted to a positive rating.


• Maintain an open account
  Ask the creditor to keep the account open while fulfilling your payment agreement. You are more persuasive if you offer to fully pay the debt with interest or an added service charge. Be certain that whatever you promise is within your budget so you can keep your word.


• Send a letter
  State your verbal agreement in writing. Follow up with a certified (return receipt) letter to the creditor. You may want an attorney to review the agreement. Once the creditor signs and returns the agreement to you, it can become part of your credit record.


• Follow through on your promise
  When you have a written agreement, you need only follow through and make the payments for your credit rating to be restored. Inform your creditor before you miss any payments, if your ability to pay should be threatened by an unexpected setback. Explore mutually acceptable ways to solve your temporary problem.


• Check your credit report
  Verify that the creditor has made the promised changes, once the payment plan has been completed. Request your update after 30 days. If changes have not been made, remind the creditor of the agreement. If the creditor still refuses to make the agreed changes, you can then dispute the information on your credit report using the creditor's agreement to support the change.

• Obsolete Info On Credit Report
• Late Payment Dispute Letter
• Disputing Ex-Spouse’s Account
• Someone Else’s Credit Info Included On My Credit Report