Clean Up Credit Report: Everyone should check their credit reports every year and take steps to clean them up if necessary— that is, get rid of outdated and old data.
You will need to order copies of your report from the three major credit offices (also known as credit reporting agencies) to clean up your credit record, check the documents for inaccuracies or outdated data, and then ask the credit offices to correct the details.
Accessing your credit report is easy, but if you’ve never pulled it before, you might feel a little scary. Understanding what information affects your report (and your score) will help you identify and strengthen those negative areas. A good financial health foundation is a paradise.
In this article, we will guide you through six steps that will help you to clean up your credit report.
What Does Cleaning Up Your Credit Report Mean?
When you clean up your credit, you get it in the strongest shape possible so lenders view you as a trustworthy potential borrower.
Each credit reporting agency—Experian, TransUnion and Equifax—has its own process you can use to dispute information you believe appears erroneously. This could include personal information or accounts that do not belong to you.
What Items Can Damage Your Credit Score? Can it be Fixed?
Incorrect Information on Your Credit Report
Generally, the most effortless thing to fix on your credit report is erroneous data. Administrative mistakes could undoubtedly prompt credit report blunders.
Try not to disregard these blunders since they could be harming your credit. Present a credit report dispute letter to have wrong data removed. This is a move that will help clean up your credit report.
Past Due Accounts
Your payment history has the biggest effect on your FICO rating. Late payments will hurt your FICO rating more than everything else as payment history is 35 percent of your FICO score.
Get present on any records that are reprobate. If you have accounts that are 30 or 60 days late, make those payments to prevent them from negatively affecting your credit. When records spend 90 days late, they’re viewed as incredibly reprobate and could become delinquent.
Consult with lenders and debt collectors to take out charge-offs and collection accounts from your credit report. They don’t need to remove this data, yet you might have the option to consult with them by paying for erasure. If the record is as of now paid, a goodwill letter is likely your most solid option.
High and Over-The-Limit Balances
Your degree of debt has the second-biggest effect on your FICO assessment as it is 30 percent of your FICO score. Preferably, your charge card balance ought to be at or beneath 30 percent of your credit limit. That implies you ought to have at most $300 balance on a Mastercard with a $1,000 limit.
For a start, focus on bringing over-the-limit balances below your credit limit At that point, work on bringing all your credit card balances down to a more credit-friendly level.
Pay any outstanding debt. They’ll continue harming your credit either until you’ve paid it or until it tumbles off following seven years or after the statute of impediments, whichever comes first. The impediments differ by state.
Student Loan Default
Student loan default is never permanent. Discuss with your lender to find out what your student loan repayment options are to bring them out of default. Often, you’ll have to submit several months of timely payments before your student loan will be considered current. In some cases, you may want to consider a student loan forgiveness program.
Bankruptcy, Foreclosure, Paid Tax Liens, Paid Judgments
With these kinds of sections, there is nothing to fix, except if the entry is incorrect. All things considered, you would utilize the dispute procedure to have the thing removed from your credit report. You may need to work with the courts and banks to have their records refreshed.
If bankruptcy or another genuine wrongdoing is recorded on your credit report, center on modifying your credit by including positive payment history and showing you can manage your credit. If you can’t get endorsed for an ordinary credit card, apply for a secured credit card. Utilize the card to make little buys and cover your bill in full each month.
Steps towards building better credit.
1. Figure out where you stand
Before you the credit repair, you’ll need to get copies of your full credit reports from all the three bureaus (Experian, TransUnion, and Equifax).
Credit scores range from 300 to 850. A score of between 700 and 740, depending on the scoring method used, is considered a “good credit” and often enough to qualify you for the best credit cards and lowest mortgage rates.
2. If you find errors, dispute them
The next step in credit repair is to remove incorrect information on your credit report.
Errors aren’t common, but they happen. Truly, sometimes bad credit is just your fault. You shouldn’t try to argue accurate information, but if you do see errors–even small ones—it’s worth cleaning them up.
3. Stop the bad attitude
Once you deal with any errors on your credit report, it’s time to ensure you’re not still spending more than you can afford each month.
Why is this so important? It’s because are only three simple things to do to repair bad credit:
- Pay all of your bills on time
- Pay down debt (especially credit card debt)
- Avoid applying for credit
4. Pay all bills on time going forward
If you want to fix bad credit, you need to start paying all of your monthly bills on time. If you are behind on any bill, get caught up as soon as you can. On-time payments are the single most important factor to your credit score. Simply say, your credit won’t improve until you can consistently pay every bill on time.
5. Pay down credit card balances
Handle your credit cards by paying down their balances. If you have any outstanding debt, make room in your budget to pay down these debts bit by bit, every month until they are fully paid. Know your credit limits and try hard to stay well under the maximum when charging items.
6. Don’t apply for new credit
Finally, resist the temptation to open a new credit card, even if a store offers a discount on your purchase for doing so. Every time you apply for credit is listed on your credit report as a “hard inquiry” and if you have too many in two years, your credit score will suffer.
Generally, a consumer with good credit can apply for credit a few times each year before it starts affecting their credit score. If you are already starting with below-average credit, however, these inquiries may have more of any impact on your credit score and delay your ultimate goal of watching your credit score climb.