How to Erase a Credit History

Fixing your credit history is the single best personal finance decision that a consumer can make. In the United States, credit history determines whether an individual can rent or own a home, be issued a non-secured credit card, purchase a new car or even be hired for employment. This step-by-step guide will enable anyone to clear their credit history with moderate effort and learn ways maintain excellent credit.

Instructions

1

Secure a copy of your credit report from all three of the major credit agencies. This will enable you to to determine whether the report you receive is up to date.

2

Determine if the report has errors or other discrepancies, such as incorrect addresses, debt amount or other information that does not belong to you. Write down each error and make a note of the date it was entered on the report, the amount in question and the name of the credit lender. Getting the telephone number of the creditor is also a good idea, however many lenders use the services of collection agencies; therefore finding the original creditors' telephone number could prove tedious.

3

Contact the lenders or collection agencies. The actual act of picking up the phone to call a creditor is hardest part of the credit repair process. Be prepared to withstand any type of conversation. Though debt collections practices have changed drastically, it is not uncommon to come across a collector who is unreasonable and downright ornery. Try to keep the tone of the call light and upbeat without giving away your authority.

4

Gather any information you can from the call. Though debt collectors are trained to seek out identifiable information on you, it is imperative to do your own investigation as well. Since you are the initiator of the call, you are in a better position to negotiate a lower amount on the final debt. Most collection agents are qualified to accept a 50 to 75 percent settlement fee. A settlement fee is the amount you will pay to close out your debt and mark it as paid off. Secure everything in writing before ending any transaction. Be sure to get the name of the agent, any identifying employee ID, extension number and the date of the call.

5

Dispute any erroneous debt information using the postal mail instead of online. While this may seem inconvenient to you, it is also inconvenient for credit bureaus as well. When a paper dispute is sent to a credit bureau, the bureau has up to thirty days to respond. Most agencies use this time to locate the credit file and determine whether the debt is valid. If the response is not received within this time frame, the debt is usually erased. Delays from mail and locating credit files are factored into this time. When using an online dispute system, the bureau is not bothered with paperwork and postal delays. Therefore, disputes submitted online are usually responded to much faster.

6

After all errors are cleared from your report, pay off any valid debts. Start with small amounts and work your way to the larger amounts. This system allows for your credit file to update faster since debts are being paid off, and also gives you the sense of accomplishment. Be sure to use a simple excel sheet or any other tool to track your payoff amounts and notify you of upcoming due dates. Once you have gotten into the habit of paying your bills on time and regularly, your credit score will rise substantially.

7

After your credit file is somewhat clear of negative items, that is the time to start adding positive lines of credit to balance out the report. This can be accomplished by applying for secured loans at your local bank. A small loan of $200 can be obtained using your own funds as the surety. Making timely payments on these loans for a few months will increase your score and enable you to apply for unsecured loans or other financial products.