How to Clean Up a Credit Report
Each year, thousands of people are denied credit due to inaccuracies in their credit report. These problems aren't only detrimental to your personal finances--they can also cause you to be passed over for a job. For these reason, understanding and cleaning up your credit report is important.
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Instructions
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Record all financial transactions and keep copies. This is important especially when paying off a balance on a credit card or paying off a long-standing debt. If you have received a settlement offer to pay off a debt, make sure to get this settlement in writing. Always included copies of canceled checks or bank reconciliation statements with these payoffs. This will be your future proof that the account was paid off. You may need this to show the credit agencies should you have to submit a dispute to the reporting agency.
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Obtain copies of your credit report from credit reporting agencies. Some companies allow you access to your records at any time for a low monthly fee. Federal law mandates that consumers be given free access to their credit reports once each year. These reports can be accessed online thorough the website listed below in the Resources section. It's a good idea to print these out each year and keep them for your records. Remember to get copies from the agencies. Just because an error does not occur on one does not mean it won't appear on another agency report.
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Examine your credit reports. Take the time to look them over for any discrepancies. Look for settlement information and check to determine if everyone you have paid off has reported this to the credit agencies. What might seem like a small error could cause your credit score to change dramatically.
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Look for items that you did not apply for credit or financing for. If you find these items, you may have been the victim of identity theft. Consider enrolling in an identity protection service. These services will contact you regarding suspicious behavior (see Resource below).
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Compare the information on the report with the information from your records. If you see an error first contact the creditor to ensure that the payment was posted to your account. Accounting errors do occur once in a while, and may show the payment as late or not posted at all. For this reason, your canceled checks and bank statements are valuable tools to back up your claims.
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Report any errors to the individual credit reporting agencies. Each credit agency has a section on their website where you can submit disputes. Be as detailed as possible when submitting a dispute, and follow up with the agency to determine if the changes have been made.
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Continue to pay your bills on time each month. Many people think that credit card companies and other financial institutions are the only ones that report information. In some cases, utility companies will also report late payments. Paying on time will decrease late fees and keep your credit score up.
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Tips & Warnings
Check your credit report at least once each year.
Retain records of all disputes in the event that the validity of your dispute is questioned.
When filing a dispute it can take 30 to 60 days to have the matter resolved. Be patient, but do not let them forget about you.
