Information on How to Clean Your Credit Report

A credit report and credit score will affect what rates and payments you get on loans. It can also affect the type of employment you are offered. Cleaning up your credit report is essential to financial health. There are a number of strategies you can employ, some of which are simple and some of which are long-term, complex and frustrating. However, removing negative items on your report will be invaluable for your future credit health.

Instructions

1

Pull a current copy of your credit report. Visit the site www.AnnualCreditReport.com for a free copy. This is the U.S. government's federally-mandated site. You will need to pay for your credit score (also known as your FICO score, a three digit number between 300 and 850). Excellent scores are above 720; poor scores are below 600.

2

Look for the following items: judgments, liens, collection accounts, medical judgments and any delinquent accounts. These are the most damaging and must be cleared up first. But before paying them, make sure they are legitimate. Verify the accuracy of all late accounts with your records.

3

Report any fraud or inaccurate reports to the three credit bureaus--TransUnion, Experian, and Equifax. (See Resources). Draft a letter for each inaccurate or invalid account and include your name, address, social security number and account number. Include any documents supporting your claims. The credit bureaus have 30 days to respond and 90 days to clear the account.

4

Obtain payoff statements on all delinquent accounts you found in Step 2. You can settle these debts (negotiate a lesser amount) but this will further damage your credit. Pay these in full. Make sure to obtain paid-in-full letters from each lender and collection agency.

5

Make a new budget. Review at least three months of bank statements and look for areas to cut expenses. Usually the most money can be pulled from your entertainment, dining and shopping budget. This may dramatically increase your disposable income.

6

Bring any delinquent accounts current first. Then focus on bringing any over-limit accounts under their credit limits. Next, with the disposable income you created with your new budget, begin paying down your credit accounts, starting with the highest-interest account. Pay minimums on all other accounts until this account is paid-in-full.

7

Repeat the process in Step 6 until all debts are paid off. Make sure you have a good balance of credit accounts. A good mix includes: one or two credit cards, one or two installment accounts (mortgages, car loans) and one charge card.