How to Clear a Bad Credit Record

Cutting up your credit cards isn't the way to clear a bad credit report.

A bad credit record severely affects your ability to get credit. All lenders, when considering your application for credit, check your credit record. Ensure you know what your credit records show. Three credit reporting bureaus are used by lenders: Experian, Equifax and TransUnion. You can get free credit reports annually for all three from AnnualCreditReport.com. It's the first place to start. Be patient: it takes time to clear a bad credit report.

Instructions

1. Apply online to AnnualCreditReport.com. Complete the online application form. Follow the simple instructions. Once your identity has been verified you can access your reports instantly and begin the process to clear a bad credit record.

2. Print your report. It makes it easier to highlight parts of the report that need attention. Check your report for errors: they lower your credit rating. Report any errors to the lender and the credit reporting bureau immediately. Correcting them is the fastest way to start to clear a bad credit record.

3. Identify and highlight areas of the report that are affecting your credit record. This is an important part of clearing your bad credit report. Credit reports show your payment history and rating for all companies you have credit with.

4. Pay off as much as possible from credit cards that are close to their credit limit. Reduce them to 50 percent. Cards close to their limit indicate a possible risk to a lender. Your report is marked and your credit rating falls. Reducing your credit card debt helps to clear a bad credit report. Rectify any late payments. Set a regular payment with your bank. Make sure future payments always reach the lender before the due date. A clean payment history improves your credit rating.

5. Clear loans if your payment history has been poor. Settled debts remain on your credit report but are recorded as paid off or satisfied. This removes bad credit from your credit report, improving your rating.

Tips & Warnings

• Get your credit report through AnnualCreditReport.com for all three credit reporting bureaus. The reports may contain different information.

• If a lender declines to correct your credit report, you can dispute it. The Federal Trade Commission website has instructions on how to do this.

• Only obtain your free credit report from AnnualCreditReport.com. It is the only official website sponsored by all three credit reporting bureaus.

• Check your report for signs of identity theft. Your credit report may be bad as a result of lines of credit obtained fraudulently.

References

• Federal Trade Commission: Building a Better Report
• MyFICO: I Know my Credit Score and Don't Want to Ignore It

Resources

• Annual Credit Report: AnnualCreditReport.com
• Federal Trade Commission: Credit Repair
• Federal Trade Commission: How to Dispute Credit Report Errors
• Federal Trade Commission: ID Theft