How to Clean Up Your Credit
Learn how to clean up your credit by following these simple steps. You can improve your credit score and get on the path to financial success.
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Check your credit report
It’s important to recognize that your credit report is a snapshot of your credit history at a given point in time. Your creditors report information about your account activity to the credit bureaus, and those agencies assemble this information into your credit report.
Your credit report includes information about current and past loans, including the loan balance, payment history and any derogatory marks such as late payments or collections. It also includes information about lines of credit, such as credit cards and home equity lines of credit (HELOCs). The report will also show whether you have any bankruptcies or foreclosures on your record.
Identify negative items
The first step is to obtain a copy of your credit report from all three credit reporting agencies — Experian, TransUnion and Equifax. Once you have your reports, go through them carefully to identify any negative items that you may want to dispute. These items could include late payments, collections, charge-offs or even bankruptcies.
If you find any errors on your report, you can file a dispute with the credit bureau to have the item removed. The bureau will then investigate your claim and if they find that the item is indeed an error, it will be removed from your report.
Once you have identified all of the negative items on your report, you can start working on cleaning up your credit.
Dispute negative items
You can dispute negative items on your credit report by writing a letter to the credit bureau. Include any documentation you have that supports your dispute, and be sure to include your contact information. The credit bureau will investigate your claim and remove the item if they find it to be inaccurate.
Monitor your credit report
You are entitled to a free credit report from each of the three national credit bureaus every 12 months. Request them at AnnualCreditReport.com. Dispute any errors you find, and take steps to improve your credit score.
A high score indicates you’re a low-risk borrower, which could translate into lower interest rates on loans and credit cards. A low score could lead to higher rates, or even being denied for certain types of financing.
To get the most accurate picture of your creditworthiness, check your credit report from all three bureaus: Equifax, Experian and TransUnion. Each report may contain different information because lenders don’t always report to all three agencies — and some information may take longer to show up on one than the others.
Improve your credit score
Negative items on your credit report can drag down your credit score, making it harder to qualify for loans and credit cards. If you have negative items on your report, there are several ways you can go about trying to improve your credit score.
One way is to dispute the items with the credit bureaus. If you believe an item on your credit report is inaccurate, you can file a dispute with the credit bureau. The bureau will then investigate the item and if they find it to be inaccurate, they will remove it from your report.
Another way to improve your credit score is to make sure you keep updated on all of your payments. This means paying all of your bills on time, including utilities, rent, mortgage, and any other kind of loan or debt you may have. Keeping updated on your payments shows lenders that you’re reliable and helps improve your credit score.
You can also try to negotiate with creditors to have them remove negative items from your credit report in exchange for payment. This is called a “pay for delete” and is sometimes successful, although it can be difficult to get creditors to agree to this arrangement.
If you have negative items on your credit report, there are steps you can take to improve your credit score. Dispute inaccurate items with the credit bureau, keep updated on all of your payments, and try to negotiate with creditors for a “pay for delete” agreement.