Negative items on your credit reports can have a huge impact on your credit score. A handful of late payments can be the difference between getting a favorable interest rate on a loan and being required to make a substantial down payment just to qualify for financing. Major derogatory items like charged off accounts, repossessions, and bankruptcies have the potential to drop your credit score so much that you will have difficulty getting approved for credit, regardless of the terms.

So what are the options when there are damaging listings on a credit file that shouldn't be there? Mistakes do happen and negative listings are incorrectly added to peoples' credit reports all the time. And what about negative listings that do describe actual events but there was a perfectly good reason behind them? Is it fair to have to deal with a bad credit score for up to a decade when the negative items on your credit reports were completely out of your control?

The Fair Credit Reporting Act provides consumers with a few options for dealing with poor credit, and enforcing their right to a fair and accurate credit score. This includes the right to order free copies of your credit reports so you can see what information is being reported about you as well as the right to dispute any items on your credit reports that you feel may be inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased or unclear.

Another antiquated option you have as a result of the Fair Credit Reporting Act is the right to add a one hundred word statement to your credit reports explaining to creditors the circumstances behind negative items on your credit reports. The idea is that when looking at your credit reports, lenders will be able to take into account the justification behind these negative listings when considering your loan application.

What makes this statement antiquated is that these days, lenders rarely consider the individual items in your credit reports. In fact, they may never see your reports at all so your carefully crafted 100-one hundred word statements would never be read.

On top of that, lenders are most interested in your credit score, which does not take the 100 word statement into account. No matter how good your justification is for having a negative item on your credit reports, your credit score will remain unchanged.

The only way to prevent negative items from lowering your credit score is to have them removed from your credit report. One option people have for attempting to do this is the credit bureau dispute described in the Fair Credit Reporting Act. Additional credit repair options are made available through a number of other consumer protection acts targeted towards creditors and collections agencies.