Clean Your Credit Report in Six Simple Steps

There's nothing more unpleasant than having your credit score lowered because of false, unjust, or out-of-date information on your credit report. It's not an unusual problem; according to the Federal Trade Commission, one in every five persons has an inaccuracy on at least one of their three credit reports.

The importance of examining your credit report and making efforts to improve your credit score should come as no surprise, especially if you have poor credit. Negative marks can negatively impact your credit scores for years, preventing you from achieving significant life milestones such as purchasing a car or home.

To assist you in getting started, here is a step-by-step approach to repairing your credit reports that include six steps.

1.    Request a Copy of Your Credit Report

The most critical step in the credit restoration procedure is to dispute any inaccurate or unjust information that appears on your credit reports. Not all bad items in your credit reports are indeed inaccurate, but as we previously stated, it's not rare for consumers to discover suspicious, unfavorable entries on their credit reports.

The Fair Credit Reporting Act (FCRA) grants you the right to receive a free credit report from each of the three leading credit agencies, Equifax, TransUnion, and Experian, once a year as long as you meet specific requirements. It is critical to monitor all three credit reporting agencies' reports since information is not always shared among the three credit reporting agencies.

2.    Review Your Credit Records

Examining your credit reports will offer you a better understanding of the issues negatively impacting your credit and what you can do to address them. Because even minor typographical errors can have a significant impact on your credit score, you should carefully review your credit reports line by line to ensure that all of the information is accurate before submitting them.

Keep an eye on the following:

·        Account balances

·        Loan statuses

·        Payment record

·        Inquiries about your credit history

·        Personal information

3.    Dispute All Mistakes

If you discover false information, you can file a dispute with the credit bureaus and request to delete the information from your credit reports.

You have the right to contest any unfavorable entries on your credit reports that you believe are erroneous, untimely, misleading, biased, incomplete, or unsubstantiated, as long as you provide evidence to support your claim.

Lenders have an inaccurate perception of your credit risk due to these factors. Making these disputed items disappear may assist you in ensuring that your credit score truly represents your credit history.

The following are the steps to be followed when submitting a dispute:

·        Prepare documentation to back up your claim

·        Write a dispute letter that specifies the item(s) you're contesting, explains your position and asks that the error be removed or fixed if it has occurred.

·        Make copies of all of your records.

·        Expect to hear back within 30 to 45 days.

4.    Reduce Your Credit Debt

If you have a total credit balance, you can calculate your credit utilization by dividing it by the total amount of available credit. The ideal situation is for your credit utilization to be less than 30 percent. If you have a high credit utilization rate, you should consider paying down your credit card balances and restricting your expenditures.

5.    Try to Remove Late Payments

It is possible to have accurately recorded late payments removed from your credit report, though this is not guaranteed. You can request that your creditor delete the information from your report.

If you're on good terms with your creditor, you can write a goodwill letter to them requesting that they erase the late payment from your account. Goodwill letters, which are written requests to your creditors to remove late payments from your credit report, point out your record of on-time payments, and explain why the particular late payment in question occurred are all examples of goodwill letters. Please remember that your creditor is under no obligation to react to your letter, although they may do so if you have a long history of making on-time payments consistently.

Alternatively, you could request a late payment removed by sending a pay for deletion letter. Pay for delete letters are used to negotiate with your creditor, in which you offer to pay the remaining price of the outstanding loans in return for the removal of the late payment from your credit report.

6.    Take Care of Any Outstanding Bills

Make a concerted effort to pay off any outstanding loans or credit card balances as quickly as feasible. The payment history component of your FICO® score accounts for 35% of your total score.

Here are some suggestions for catching up on past-due accounts:

·        Complete use of a balance transfer card to streamline your bills and ensure that you always make your payments on time.

·        Speak with your creditor to determine whether a payment plan is available.

·        Make an effort for settlement.

·        Send a pay for delete letter.

·        Bankruptcy may also be an option to consider. However, before proceeding, you should talk with a lawyer to understand how bankruptcy works and how it will affect you.

How Can I Get My Credit History in Order Quickly?

Unfortunately, there is no easy solution to clean up your credit records. Credit bureaus have 30 - 45 days to investigate under federal law when you dispute information. The information on credit reports can be kept for up to ten years if the credit bureaus can validate it.

Paying off credit card debt is a terrific method to boost your credit score, but the changes may not show up right away. Many creditors only deliver information once a month, if at all, and in other cases much less frequently.

It's important to remember that clearing your credit requires a while, but it's well worth it in the end.

The Advantages of Having a Good Credit Report

There are numerous advantages to maintaining a healthy credit report. If you have good credit, you have a better chance of getting approved for credit lines and receiving cheaper interest rates. It can also assist you in obtaining an apartment or finding a job. Consumers who have good credit are also more likely to pay reduced insurance rates.