To clean up your credit, first request your credit report through the credit bureaus or a site like WalletHub, then review the details of your credit report for inaccurate information, and dispute any errors you find. After that, you should focus on adding as much positive information to your credit report as possible. This will help make up for any negative credit records you can’t get rid of.
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Cleaning up your credit involves making sure your credit report is accurate and, ultimately, an asset in your life rather than a liability. A clean credit report can save you money and keep you safe from identity theft and fraud.
The following steps will help you transform your dirty, scuffed credit to a clean credit rating that can help you get better terms with lenders and creditors.
1. Request Your Credit Report
You can get your credit reports from all three credit bureaus (Experian, Equifax, and TransUnion) for free on a weekly basis at AnnualCreditReport.com. You will need to verify your identity by providing personal information like your name, Social Security number, date of birth, and current and previous addresses.
Many third-party services, such as WalletHub, offer you free credit reports as well. WalletHub gives you access to your TransUnion credit report, which is updated daily. You’ll also get your VantageScore credit score based on your TransUnion credit report, 24/7 credit monitoring, and a personalized credit analysis and credit improvement plan.
Learn more about how to get your credit report for free.
2. Review Your Credit Report for Errors & Signs of Fraud
Once you have your credit report, look for inaccurate information, such as incorrect name spelling, wrong address or credit account details, and accounts you don’t recognize. It could be the result of a mistake made by a so-called data furnisher — a lender or collection agency, for instance — or a sign of fraud, such as an unrecognized credit inquiry. Or it could prove to be a simple administrative error.
Such issues aren’t always apparent, which is why it’s good to go through your report line by line, cross-referencing details against other financial records. In doing so, make sure not to overlook biographical information, such as your name, address(es) and employer(s), either. Discrepancies could be an early indication of identity theft. We also recommend making a list of the potential problems to investigate further as you go.
If you have a WalletHub account, pay special attention to any credit components for which you are receiving a poor grade, and thus need to improve. You can find this information on your account’s credit analysis page.
3. Dispute All Errors & Derogatory Marks From Authorized Use
If you find any mistakes on your credit report, your next step should be to gather more information. That means contacting whichever lender reported the inaccuracy to the credit bureau(s). If you don’t learn anything that changes your mind, you’ll want to begin the dispute process.
Filing a dispute with each bureau whose credit report lists the inaccuracy will trigger a review of the information. If each bureau concludes that it is indeed a mistake, the information will be removed from your credit report. If the listing was among the few negatives on your report, it could quickly boost your credit score.
It’s worth noting that if there’s any negative information in your credit report from an account you were an authorized user on, you can have it removed. That’s because an authorized user is not legally liable for making payments and thus can’t be held responsible (in a credit report sense) for not doing so. You simply have to ask the card issuer to remove you as an authorized user – if that hasn’t happened already – and then follow the standard dispute process so the credit bureau can remove the listing from your credit report as well.
4. Get Current On Delinquencies & Pay Off Collections
The more delinquent a past-due balance, the worse the resulting credit score damage will be. That’s especially true if the debt is charged off, sold to a collection agency and/or triggers a lawsuit. Until that point, however, making up missed payments may help you stop the bleeding and drag your credit to higher ground.
Paying off any lingering small-dollar collections accounts would be wise, too. More recent credit scoring models – including VantageScore 3.0, VantageScore 4.0, FICO Score 9, and FICO Score 10 – do not consider paid collections accounts in their calculations.
5. Add a Consumer Statement
You can add a consumer statement to your credit report if you are not satisfied with the outcome of a dispute. Simply submit a written request to the credit bureau with a statement that adds context to the relevant items in your credit report. Each credit bureau may have rules on how long the statement can be. For instance, Experian limits your consumer statement to 475 characters.
Much like a personal statement on a college essay, this gives you the opportunity to explain red flags in your credit history and why such behavior won’t repeat itself. For example, it could be that an illness or family emergency prevented you from making on-time credit card payments. This won’t produce any tangible credit score gains, but a good consumer statement could serve as the cherry on top of your clean-up efforts.
6. Infuse Your Credit Report With Positive Information
There’s only so much you can do to tidy up the information that’s already on your credit report. So it’s important to start attacking the problem from the outside. What you need is a steady stream of positive information flowing into your credit reports each month, as this will gradually devalue the bad stuff in your files.
Some things you can do to add positive information to your credit report include:
- Opening a no-annual-fee credit card and keeping it in good standing.
- Paying your monthly bills on time (and in full whenever possible).
- Becoming an authorized useron a trustworthy friend’s or family member’s account.
- Monitoring your credit report to quickly spot inaccuracies.
It’s also a good idea to keep track of your credit score, which you can do for free here on WalletHub. Your credit score is calculated using the information in your credit report, so a drop in your credit score is an indication that something may be going on with your report.
To learn more, check out WalletHub’s guides about building and improving credit.
Why It Is Important to Clean Up Your Credit
It’s important to clean up your credit report to prevent bad financial habits, previous mistakes, and errors from negatively impacting you. A study conducted by Consumer Reports discovered that 44% of people found at least one error in their credit report, and 27% of those errors were serious enough to affect their credit score.
Unfortunately, not everyone takes the time to clean up their credit. In fact, only about a third of us regularly check our credit reports and scores, according to the National Foundation for Credit Counseling. That leaves the majority vulnerable to credit bureau mistakes and unaware of the various small signs of fraud that can blossom into giant problems if left unaddressed.
Fortunately, it’s pretty easy to keep your credit fresh and clean. And it doesn’t have to cost you a thing, at least if you sign up for a free WalletHub account. WalletHub provides unprecedented access to your credit information and helps guide you to peak financial fitness with customized credit-improvement advice and personalized money-saving offers.
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