How To Clean Up Your Credit Report And Credit Score

Image by GettyImages; Illustration by Bankrate

Your credit report summarizes your credit history, including the types of accounts you have, how much money you’ve borrowed and whether you make payments on time. Errors on your credit report — and negative but true information — can drag down your credit score and affect many aspects of your financial life.

Cleaning up your credit reports by getting errors fixed and taking steps to address any legitimate negative information can help you improve your credit file.

Why should you clean up your credit report?

A clean credit report shows you’re a responsible borrower who can be trusted to pay off debts as agreed. Having better credit can help you in many aspects of your life.

• Better loan approval chances: The best credit cards are typically offered to people with scores of 670 or higher.
• Increased job opportunities: Employers may check your credit as part of the hiring process. Bad credit may disqualify you from certain jobs, such as those involving finances or sensitive information.
• Lower insurance premiums: In most states, insurance companies can consider your credit-based insurance score. Negative marks lower your score, resulting in higher premiums, while a clean report can lead to lower premiums.
• Lower interest rates: Having good credit indicates you make payments on time, so lenders may offer lower interest rates. A lower rate means it’s less expensive to borrow money.
• More favorable loan terms: Lenders may offer higher loan amounts, longer repayment periods and lower fees to people with good credit.
• More housing options: Landlords may check your credit to gauge how likely you are to pay your rent on time. Bad credit could limit your access to housing.

How to remove errors from your credit report

Cleaning up your credit report starts with getting any incorrect, incomplete or outdated information removed or corrected. While not every inaccurate item will lead to a lower credit score, some errors can unfairly damage your credit score and give potential lenders the wrong impression. From start to finish, here are the steps to fix errors as quickly as possible.

1. Get copies of all three of your credit reports

For a thorough clean-up job, you need to know exactly what information has been reported to all three bureaus.

You can request copies of your original reports directly from each bureau: Equifax, Experian and TransUnion. You can get free copies of your credit reports once a week at AnnualCreditReport.com, an official website operated by the three credit bureaus.

2. Check your report for errors

Carefully review your credit reports and look for any accounts you don’t recognize or information that seems incorrect. Some examples of common credit report errors that could negatively impact your credit score include:

• Accounts you didn’t open.
• Debt reported to collections you don’t recognize.
• Errors in your credit limits or account balances.
• Old negative items that should have fallen off your report.
• Payments wrongly reported as 30-plus days late or missed.

Other errors might not negatively impact your credit score. For example, an incorrect middle initial isn’t going to harm your credit score. Some errors, such as an account you don’t own that’s in good standing, could even raise your score. It’s still important to deal with these errors to ensure your report is accurate.

3. Dispute errors with each credit bureau

The third step to clean up your credit is to dispute all the errors you find. The credit bureaus work independently, so you’ll usually need to file a dispute with each bureau reporting the incorrect information. After receiving your dispute, the bureaus generally have 30 days to investigate and five days to notify you of the results.

The credit bureaus accept disputes by mail, online or over the phone. There’s no fee for submitting a dispute.

• How to file a dispute by mail
  

  To dispute credit report errors by mail, you can write a letter to the appropriate bureaus. The Federal Trade Commission provides a sample letter you can use as a template. The credit bureaus also offer dispute forms you can print and fill out:

  Send your dispute using certified mail.

• How to file a dispute online
  

  Each of the credit bureaus allows consumers to file disputes online, where you can easily track the status of your dispute. To get started, use the online submission form on the relevant credit bureau’s website:

• How to file a dispute by phone
  

  The credit bureaus also accept disputes and follow-ups by phone. Here are the phone numbers for the bureaus:

  • Equifax: 888-378-4329.
  • Experian: 888-397-3742.
  • TransUnion: 800-916-8800.

How to deal with legitimate negative information

When you scan your credit report for errors, you might notice accurate negative information — such as an account that was sent to collections, a payment you made 30-plus days late, or a bankruptcy filing — that you wish you could erase.

You can’t dispute negative information if it’s true, but you can still take steps to clean up your report. In some cases, it’s possible to remove negative information or reduce its impact on your credit.

Here are some methods that might help you clean up your report:

• Negotiate a settlement: You can try to settle debts for less than the full amount owed to get the accounts closed.
• Pay the debt: If you can, your best option is to pay anything you owe. Some newer credit scoring models ignore collection accounts that are paid in full.
• Seek professional assistance: Consider hiring a credit repair company to help you clean up your report.
• Validate your debt: Ask the collection agency for documentation verifying the debt to evade zombie debt.
• Write a goodwill letter: Ask the creditor to remove a negative mark as a one-time courtesy.

Where to get help cleaning up your credit report

You don’t need to fix your credit on your own. If you don’t have time to clean up your credit report (or don’t feel comfortable tackling the process on your own) a credit repair company or credit counseling organization might be able to help.

Credit repair companies

Credit repair companies help people clean up errors on their credit reports. They handle the process on your behalf, including requesting copies of your credit reports, identifying potential errors, and submitting disputes to the credit bureaus.

If you want to go this route, research the best credit repair companies. Compare each company’s credit repair services and monthly fees and read online reviews left by actual customers before moving forward.

Credit counseling organizations

Credit counseling organizations help you make a plan to clean up your financial habits. This could be a good option if legitimate negative marks rather than errors lower your credit score.

To find the best credit counseling organizations, look at recommendations from trustworthy resources, like the Financial Counseling Association of America, the National Foundation for Credit Counseling or the U.S. Department of Justice.

Bottom line

If you’re planning to apply for a new job or apartment, buy a new car or even apply for a new rewards credit card, having a clean credit report could help you reach your goals. To start the clean-up process, request copies of your credit reports. Then, take steps to dispute errors and address any legitimate negative marks.

Frequently asked questions

• Can your credit report be wiped clean?
  

  Unfortunately, it’s not possible to erase your entire credit history and start fresh. Negative items like late payments, collections and bankruptcies typically remain on your credit report for several years. However, you can rebuild your credit with on-time payments, debt reduction and responsible credit account management.

• How long does it take to clean up your credit report?
  

  Every credit report is different, so the time it takes to clean up your report will vary depending on the information that’s been reported. If you only have one or two errors, you can expect a fairly quick process. However, if you’ve been a victim of identity theft and have many accounts to dispute, the process may take more time and patience.

• Is it true that after seven years your credit is clear?
  

  While most negative information falls off your credit report after seven years, it doesn’t mean your credit is automatically clear. Some items can remain on your credit report for longer than seven years. Chapter 7 bankruptcies, for example, remain for up to 10 years. Unpaid federal student loans can remain on your credit report indefinitely.

• Should I dispute credit report errors with the original lender?
  

  It’s not just the credit bureau’s responsibility to ensure the accuracy and completeness of your credit report. Creditors must do their part, as well. The Federal Trade Commission recommends asking the credit bureau and the lender that reported the incorrect information to correct their records.

  If you need to file a dispute with a lender or creditor, contact the business directly. The company’s contact information should be on your monthly billing statement.

• How does a credit report dispute affect your credit score?
  

  While disputing credit report errors is a common tactic for people hoping to boost their credit score, filing a dispute does not guarantee your credit score will go up. Successful disputes can cause positive, negative or no effects on your credit scores.

  • Score improvements: Errors related to debt could leave you with a score that’s unfairly low. Disputing incorrect late payments, past-due accounts, settled debts or accounts in collections could improve your score.
  • No score changes: Some types of errors don’t affect your credit score, so you won’t see a change after the mistake is corrected. Corrections to personal information, like the spelling of your name or address, won’t change your score unless they were incorrectly tied to someone else’s account.
  • Score reductions: Any error in your favor that you correct could hurt your score. For example, removing an incorrect or duplicate account could decrease your credit score if it shortens the length of your credit history or raises your credit utilization.