Credit can be a sensitive issue, but it’s no big deal if you know how to repair your credit. The most important thing is that you’re aware of the errors on your credit report and take action to correct them. We will walk you through 6 steps for repairing mistakes on your credit report so that you can start rebuilding your credit score.
Why It's Important To Clean Your Credit?
One of the most frustrating things about dealing with credit is that it can be hard to clean up your record if you don’t know how. If there are errors on your report, the information could be hurting your score instead of helping by making it harder for you to obtain loans and other lines of credit at a reasonable rate because lenders think you’re high risk.
Negative marks on your credit can stay on your report for up to seven years. That means even if you’ve paid off a debt, it will still be there and could affect whether or not someone thinks you’re worthy of giving you money in the future.
When Should You Clean Your Credit?
You should start cleaning up your credit as soon as possible after receiving notice from creditors or collection agencies requesting repayment of debts reported in error. This will help ensure that any inaccurate reporting does not continue to reflect adversely upon your financial status, thus tarnishing what might have been an otherwise good track record over time. The longer these items stay on file, the more they could negatively impact your credit score.
What Do You Need To Know About Fixing Credit?
If you are dealing with collection agencies, ensure that the debt is accurate and not duplicated on more than one account or reported incorrectly to any of the three major credit bureaus. Collection agency accounts should be removed from your record after seven years unless it’s an open-ended contract like a mortgage loan, for example, in which case it stays until paid off completely.
Keep all documentation related to disputes consisting of copies of letters sent out requesting repayment or deletion along with proof that communications were received by creditors/collection agencies, such as return receipts signed by someone at the creditor company verifying receipt. This will help to prove that you have a case and will allow for a quicker resolution.
Request Credit Reports
If you cannot get a valid deletion or correction made, then it may be necessary for you to request three free credit reports from all of the major bureaus. You can do this once per year to check for any incorrect, outdated, or duplicate information that might be on file.
Check Credit Reports
If you notice an error, immediately contact the creditor or collection agency listed in your credit report to dispute the item. Include copies of any proof requested earlier, along with a letter explaining why the information is inaccurate and should be removed.
Follow up after 30 days if there has been no action taken on their part. If this does not resolve the issue within another month’s time, then write directly to each of three major bureaus who will research for free and ask them to look into it further since they are now more than just creditors but also agencies reporting financial status.
Request that they send a notification once changes have been made so you can check back later at all three sites again, following up every few months until everything seems accurate.
Lower Credit Utilization
It is essential to lower your credit utilization to repair errors in your credit report. It’s recommended that you keep the balance of revolving accounts at 30% or less and limit installment loans (with fixed monthly payments) with a total repayment period over 36 months tend to make up only 25 percent of the borrower’s overall debt load.
Try To Deal/Remove Any Late Payments
One thing to remember when repairing credit is that you should try and deal with any late payments. If there are articles in the newspaper about creditors accepting settlements for less than what is owed, it might be a good idea to get on this while interest rates are low.
They may also take anything over seven years off of your record, so if you had a delinquent account five or ten years ago, now would be the time to give them a call.
It’s crucial to dispute errors on your credit report. There are three major credit bureaus, Experian, TransUnion, and Equifax, that track all of this information, so you want to check with them first before disputing anything. You can’t have more than one outstanding balance for the same account listed at once. Still, they may also list duplicate accounts or incorrect balances due to inaccurate amounts reported by creditors.
Tackle All Outstanding Balance
When it comes to tackling your outstanding balances, pay the minimum on all of them and then focus most of your energy on paying off one by increasing its repayment period. This will keep you from falling back into old habits that got you in trouble in the past, like spending more than what is necessary or not prioritizing debt payments.
Continue To Make All Payments On Time
It’s essential when repairing credit to continue making all payments on time because this shows creditors how reliable a borrower can be. It might seem like having some delinquencies here won’t affect things too much, but they usually add up and could prevent someone with “too many” late/missed payments from being approved for credit cards or loans.
Is It Possible To Clean Credit History Fast?
While there are no quick fixes or overnight miracles when it comes to repairing credit, there are steps you can take to remove errors quickly. The federal law allows credit bureaus to remove items they say are inaccurate after you dispute them with them.
However, if you have many errors on your credit file, this may not be the best solution. Instead, you should look into an alternative dispute process. While this can take some time, it’s generally more effective.