Question: How can I deal with negative credit reports and rebuild my credit?

Hello, My question is this: I recently had my credit report pulled as I was looking to refinance my auto loan, which is currently around 17% interest. My score is around 575. Looking at my report with a consultant, I noticed some double reporting, which was affecting my credit. I contacted the companies and they stated they do not have the accounts. I finally found where the account was and paid it off and filed a dispute for the other companies that were reporting it even though they don't have the account. So that was my first step towards fixing my credit. There were also 3 negative reports from my student loan as it fell into collection for awhile, but the companies that are reporting them closed the account in 2009 and have no further record of it. I contacted TransUnion and they stated even though those accounts are closed, they will continue to be reported negatively for 7 years, so I have another 3 years of it bringing down my score. Is that true?

I am currently paying my student loan now with the U.S. Dept. of Education, but it appears it was shuffled around with them for a bit in the past. That is why they are reporting it 3 times as a negative account. Since I am paying it now (and have been for the past year) I don't get why those other 3 reports must stay there for 7 years.

Also, my credit union says there is nothing I can really do to help build credit except wait 3 years for those negative accounts to fall off. I am currently in good standing with my car loan and my student loan, so those are the only positive credit I am building. What else can I do? I can't get a credit card (I currently have none) as my score is too low and get denied. I tried for what is called a Visa Pledge card, which is a credit card that I put the money down on, but again I got denied for that. I really don't want to just sit and wait 3 more years until I can do anything. Please advise, what can I do now to help build my score back up so when those negative reports fall off in 3 years I can be in a better position to purchase a new car or refinance.

Response:

That's a tough situation. What your credit union is telling you is correct: your credit has been impaired by that student loan account falling into collections, and it will remain on your record for the next three years - there's nothing you can do about that.

But you can -- and should -- remove the duplications. You need to contact any company that has had access to the account to establish that it was, in fact, duplicated, and represent that to the credit reporting agencies. It's a pain, and may take some time, but it's worth it.

Once the black mark is removed from your credit file in three years, your score will rise significantly, and you'll be in good enough shape to buy a car or refinance. Just keep your nose clean until then. As for building credit, your options are limited by your low score, but consider following these tips from Bankrate. You've clearly tried the secured card route, but I'd urge you to try again (although not too many times, as it will ding your report even more). Do it though your credit union, or if they're not helping, think about going to a bank to see what they can offer. 

Good luck! Let us know how it goes!

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