How to Clean Up Your Credit for Late Payments Over 5 Years

A good credit score is essential for obtaining credit at favorable interest rates to purchase homes, cars, and other products and services. Many consumers experience a financial setback from a job loss, divorce or some other life emergency that forces them to pay bills late, ruining their credit score. The good news is that there is hope if you have less than perfect credit. By taking certain steps to rebuild credit and clean up errors on credit reports, old bills paid late will have less impact on your credit score, eventually dropping off the report altogether after seven years in most cases.

Instructions

1

Obtain a copy of your credit report. Order copies from all three of the major credit bureaus since they often report different information. The reports can be ordered off of each bureau's sites. Be sure to order a report from Equifax, TransUnion and Experian. If you have not used this resource within the past year, you are entitled to a free copy of your reports by calling 877-322-8228. If you unable to get a free report, each report usually costs about $10, depending on that state's fees.

2

Review all three credit reports for errors. Get all of your credit card and paid files out to use for checking item on the credit report for accuracy. If necessary, check your bank records to verify that certain bills are fully paid, if they are reported as open and unpaid on reports. Read every line of the report to be sure you do not miss anything. Verifying dates is very important as the dates determine when the negative data must be deleted from the report by law. Pay off old bills as soon as possible. Be sure to keep documentation showing those bills are paid.

3

Write a dispute letter to all credit bureaus reporting errors uncovered. Include any documentation that supports your claim. Be sure to be clear and brief when writing to the credit bureaus, referencing account numbers and dates in your explanation.

4

Pay all current bills on time. Do not close old credit cards as this will lower your score. By establishing new, good credit and paying those bills on time, the late payments made in your past seven-year history will not impact your score as much. The best way to re-establish your credit after a period of not paying your bills on time is to start paying everything on time, every month.

5

Review your credit report at least annually to verify that erroneous items have been updated and that new errors have not appeared. If economically feasible, you can contract with a company that will show you any changes in your credit report monthly. When a late payment reaches the seven-year deadline, you should send a letter to get that payment removed from your credit report.