Cleaning Your Credit Reports in 6 Steps
January 30, 2020
There’s nothing more frustrating than inaccurate, unfair or outdated information bringing down your credit score. It’s not an uncommon issue—the FTC found that one in five people has an error on at least one of their three credit reports.
It should come as no surprise that reviewing your credit and taking steps to clean it is important, especially if you have bad credit. Negative marks can drag down your credit score for years and keep you from major life milestones, like buying a car or house.
To help you get started, here’s a guide to six steps for cleaning your credit reports.
1. Request Your Credit Reports
The main way to start the credit repair process is to challenge any inaccurate or unfair information in your reports. Not all negative information in your reports is wrong (unfortunately), but as we mentioned earlier, millions of credit scores across America suffer because of questionable, negative items.
Tip: The main way to start the credit repair process is to challenge any inaccurate or unfair information in your reports.
The Fair Credit Reporting Act (FCRA) gives you the right to an annual free credit report from each of the three major credit bureaus: Equifax, TransUnion and Experian. It’s important to monitor reports from all three since information is not always shared with all three credit reporting agencies.
Tip: You can request your credit reports from all three major credit bureaus by visiting AnnualCreditReport.com.
2. Review Your Credit Reports
Reviewing your credit reports will give you an idea of what things negatively affect your credit and what you need to do to fix them. Mistakes as simple as clerical errors could make a big difference for your credit score, so you’ll want to go through your reports—line by line—to make sure all the information is correct.
Pay close attention to:
- Loan statuses
- Account balances
- Payment history
- Credit inquiries
- Personal information
3. Dispute All Errors
If you do find inaccurate information, you can dispute it with the credit bureaus and try to have it removed from your credit reports.
You have the right to dispute any negative listings on your credit reports that you feel may be inaccurate, untimely, misleading, biased, incomplete or unsubstantiated.
These items are what give lenders an unfair impression of your credit risk. Disputing these questionable items may help ensure your credit score accurately reflects your credit history.
Here are the steps to follow when filing a dispute:
- Gather documentation to support your claim.
- Write a dispute letter that clearly identifies the item(s) you’re disputing, states your case and requests to have the error removed or corrected.
- Save copies of your records.
- Expect a response in 30 – 45 days.
Here’s where to submit a dispute with the three credit reporting agencies:
- Mail: TransUnion LLC, Consumer Dispute Center, PO Box 2000, Chester, PA 19016
- Mail: Experian, PO Box 4500, Allen, TX 75013
- Mail: Equifax, PO Box 740256, Atlanta, GA 30374-0256
4. Lower Your Credit Utilization
Your credit utilization is your total credit balance compared to the amount of credit available to you. Ideally, you want to keep your credit utilization below 30 percent. If you have high credit utilization, consider bringing your credit card balances down and limiting your spending.
5. Try to Remove Late Payments
If you have a negative item on your credit report from a late payment, you may be able to request a goodwill deletion to remove the late payment. But keep in mind, whether or not this request works will depend on the policies of your creditors and your relationship with them.
A goodwill deletion letter is more likely to work if you have a good history with your creditor and if it’s a one-time incident and request.
6. Tackle Outstanding Bills
Aim to pay any outstanding loans or credit cards as soon as possible. Payment history accounts for 35 percent of your FICO® score.
Here are some ways to catch up on delinquent accounts:
- Use a balance transfer card to consolidate bills and make payments on time going forward.
- Contact the creditor and see if a payment plan is an option.
- Try to negotiate a settlement.
- Send a pay for delete letter.
Bankruptcy is also an option to consider depending on your situation, but you should first consult with an attorney to understand how this works and how it will impact you.
How Can I Quickly Clean Up My Credit History?
Unfortunately, there’s no way to quickly clean your credit reports. Under federal law, the credit bureaus have 30 – 45 days to conduct their investigations when you dispute information. If the credit bureaus can verify the information on your credit reports, it can remain for up to seven years.
Paying down credit card balances is a great way to improve your credit profile, but even then, you may not see the updates immediately. Many creditors only send information once a month—sometimes even less frequently than that.
Remember that cleaning your credit takes time, but in the end, it’s worth it.