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How to fix a consumer or business credit report

Mar 23, 2011 Todd Milner

How to fix a consumer or business credit report
There are plenty of ways to protect a consumer or business credit score, but how can you restore credit once it's been damaged by a fraudster or identity thief?
 Personal finance advisor Erica Sandberg recommends these steps for people who's credit score has been damaged by fraudulent activity. Everyone - consumers and business owners alike - should check their credit reports at least once a year to monitor for fraud, Sandberg writes on CreditCards.com. If someone finds information that is incorrect, he or she is entitled to dispute the errors under the Fair Credit Reporting Act. Make copies of any documents that support a claim and send them to the credit bureaus, who then have 30 days to investigate and expunge incorrect marks. When someone discovers his or her business or personal finances have been targeted by a fraudster or identity thief, he or she can add a fraud alert their credit file. This alerts potential lenders that they must take extra precautions when verifying a borrower's identity. Adding a credit freeze is a more extreme move, Sandberg says, and will keep lenders from accessing reports until after they contact the consumer or business owner. Keep disputing incorrect information, even if the bureau doesn't accept the evidence initially. In the meantime, consumers and business owners should add a 100-words-or-less statement to credit reports explaining why they aren't responsible for the poor score. It is important to maintain an accurate credit report, no matter the actual credit score. Many employers and landlords use consumer credit data to conduct pre-employment background checks and tenant screening. Businesses can also rebuild their credit by making small charges to a corporate card and quickly paying off the balance. Microloans can also help small businesses that don't have a credit history yet, Inc. magazine reports. Microlenders typically require less documentation than major banks and usually have more flexible underwriting criteria. While the interest rates for these and other types of loans tend to be slightly higher, they provide easier access to small amounts of cash (typically under $35,000), the magazine reports. Short-term financing such as short term loans or a tax return advance can also be useful tools for cash-strapped consumers and businesses, especially for those who have a damaged credit score and struggle to obtain traditional loans.