How to Clear a Credit File

The thought of trying to clean up a credit report leaves most people cold. Although you probably know whether or not credit reports are in bad shape, you may have procrastinated due to simple fear. But you cant move forward financially with bad credit reports hanging over the head and the first step is finding out what the three largest and most recognized credit report companies are telling potential employers and lenders. So suck it up, buckle down and take care of credit issues. It may not be as bad as you think.

Instructions

1

Contact all of the three credit reporting bureaus--its a good idea to get reports from all three; they use different sources and reports will differ. The companies are Equifax, TransUnion and Experian. Call, write or make a request for the credit report online. People are entitled to one free credit report from each company each year.

2

Review reports carefully after receipt. Verify personal identification information and the list of creditors included. Check the debts against paperwork and receipts for accuracy or, in some cases, whether or not you even have (or had) an account with a creditor. Take notes and identify any disputed items.

3

Pay outstanding debts if there are no disputed items on the report. Pay the smallest bill first and work your way up--clearing accounts as quickly as possible or begin with the debt that is charging the highest percentage rate. Figure out the plan that is best for the situation.

4

Send letters to the credit companies to file a dispute. Each credit company has 30 days to respond and this includes delays they may have in locating creditors and confirming disputed figures. Debts may be erased if they cannot meet the 30-day framework. When contacting them by phone, be prepared for a potentially unpleasant collector. An option is to file the dispute online.

5

Provide the credit company with as much information about disputed debts--creditor name, account number, amount and any proof the debt has been paid (or the amount is wrong) or that the debt was never incurred.

6

Double-check all the information on the return report received. Ensure that disputes were verified, resolved or removed from the report. After all errors are cleared, contact the remaining debtors to try to negotiate payment (many will agree to a percentage of the total due). Design a realistic plan to pay off the outstanding debts. Get agreements in writing.

7

Obtain a credit card or secured credit card to help establish good credit. Be modest in its use, making purchases with the idea of re-establishing credit in mind.

8

Follow up with the credit bureaus, informing them of payments, changes and agreements. Keep in touch to ensure negative items are removed.