I ordered them, now how do I fix my credit reports?
It seems that everywhere you turn today, there are advertisements telling you to order your credit reports and check on your credit score; and for good reason. Credit ratings have an undeniable impact on so many aspects of our lives. Not only is your credit score a critical deciding factor when applying for credit, but it can also be used by landlords, employers, and insurance companies.
So, yes, it is very important to know what information is listed on your credit reports and how that information is affecting your credit score. After all, you definitely don't want to be stuck driving a dilapidated old car or have to resort to singing in a family restaurant because of your bad credit.
Anyone who is paying attention, however, will notice there is something missing from these advertisements. After you order your credit reports and find out you have a bad credit score, now what? If your credit is bad, how is knowing this fact going to help you purchase a home or land a good job?
What these advertisements don't tell you is, once you find out there are problems with your credit, there are steps you will have to take to fix them.
Fixing your credit reports
There are a number of things you may be able to do to repair your credit rating depending on your unique situation. If your credit score is low because you are using too much of your available credit (as determined by your credit utilization ratio), then you could see sizeable increases in your credit score by paying down revolving credit accounts such as credit cards. Experts suggest you keep credit card balances on each of your accounts below 30%.
If you have a poor credit score because you have not used much credit in the past, then you may need to work on establishing new credit. Creditors want to see that you have a history of using credit responsibly so even if your credit reports do not contain a single negative listing, you could still have a low credit score if the credit bureaus do not have enough information about you.
Finally, if negative items such as late payments or collections accounts are lowering your credit score, make sure to take a close look at these items to make sure they should be listed. Errors are rampant in the credit reporting system which is why consumers have the right to dispute any items in their credit reports that they feel may be inaccurate, untimely, misleading, incomplete, ambiguous, unverifiable, biased or unclear ("questionable"). For more information about credit errors, see the chapter Credit Errors: As Simple as Black & White (With a Massive Heap of Gray) from the book Credit Revolution: Path of the Smart Consumer.
Effectively disputing and removing the questionable negative items in your credit reports may end up being the most important step in fixing your credit because negative credit listings will hurt your credit score regardless of how much good credit your have on your credit reports. This is why for many people, increasing their credit score involves a combination of adding positive credit listings and removing the negative.