How to Clean Up Your Credit Report?

If you have credit problems and cannot figure out why, your credit report is the first place to look. Your credit report tells lenders if you pay your bills on time, if you have borrowed too much, and plays a part in determining if you are qualified for a loan. Any negative item on your credit report can drag down your credit score and possibly prevent you from getting a job, buying a car, or purchasing a house. Cleaning up your credit report can help you solve these problems.

When you understand the process of cleaning up your credit report, you can do this yourself without incurring high costs. In this article, you will learn how to clean up your credit report.

What does it Mean to Clean Up Your Credit Report?

Cleaning up your credit report does not mean removing anything legitimately allowed to be on the report. It means eliminating inaccurate or outdated information and correcting any errors that are on your credit report.

Inaccuracies in credit reports might include incorrect information about your accounts , outdated information that should not be included in your report, late payments you believe were paid on time, or accounts that just are not yours.

Furthermore, sometimes cleaning up your credit report includes taking action to remove any accurate negative items. For example, if you paid off a debt, you can get the late payments from that debt removed from your report. 

Here is how you can clean up your credit report:

1. Get Copies of Your Credit Report

As a general rule, it is good practice to check your credit report once a year. The three major credit bureaus — Experian, Equifax, and TransUnion, give you a free credit report every year. You can get these reports from AnnualCreditReport.com. In addition to these three free reports, you are entitled to six free Equifax credit reports every year for seven years. This means that from 2020 through 2026, all US consumers can get six free credit reports per year in addition to the regular free reports.

Experian, TransUnion, and Equifax will provide free weekly credit reports to all American consumers through December 31, 2023, to help protect your financial health through the hardship brought on by COVID-19 [1].

However, these free reports do not include your credit score. Consider registering for Smart Credit if you want frequent access to more details about your credit. You can use this paid product to get copies of your credit reports and up to 28 FICO scores from the three credit agencies. 

2. Review Your Credit Report Carefully

While most of the information in your credit report is accurate, you do need to check your credit report regularly for inaccuracies; for things such as accounts you did not open, but show up on your credit report.

While reviewing, pay close attention to your personal information, accounts, balances, payments, and inquiries. Make sure that all the information is accurate and correct. Sometimes  an account that does not belong to you or an erroneously reported late payment is listed on your credit report resulting in a lower credit score.

Also, unfamiliar balances, accounts, or payment histories may not be mistakes but are warning signs of identity theft. In this case, you should take action to resolve it quickly to prevent the situation from getting worse.

3. Challenge Inaccurate Items

When you finish reviewing your reports, list all the information you believe is inaccurate and want removed from your report. You can correct mistakes by contacting both the credit bureau and the information furnisher (the company that provided the information to the credit reporting company). Send an online dispute or a dispute letter for each item on your list to each information furnisher. In the letter, describe the disputed item, briefly explain why you think it is inaccurate, and ask for it to be removed or corrected. Also, attach all the supporting documents that you have..

You will be informed of a decision within 30 to 45 days of them receiving your dispute submission. If the dispute is successful, the negative information will be deleted. If not, you can provide more details or accept that the negative information will stay on your credit report.

4. Reduce Your Credit Utilization Ratio

Credit utilization is one of the most critical factors affecting your credit score. Your credit utilization ratio shows how much debt you have compared to your available credit. A credit utilization ratio under 30% is considered a positive factor in your credit report.

If the ratio exceeds this amount, you need to pay off your debts and not add to them to keep the ratio under 30%.  Consider transferring all your credit card debit to an interest-free card.  This allows you to pay down your balance quicker thus reducing your utilization ratio.  Another option is to take out a personal loan and use that money to pay off your credit card debt.  Personal loans are considered installment loans and do not affect your utilization ratios.

5. Try to Remove Accurate Negative Information

You cannot dispute accurate negative information, such as late payments or charge-offs, that are on your credit report. However, there are ways you may be able to remove these items. You can make a “goodwill deletion request” and ask the creditor to remove the information. They might agree to do so if you have a good credit history. Another choice is to send a “pay for delete” letter to the creditor and make a request to remove the negative item in return for payment.

As a last resort, just wait for the negative item to fall off your report which typically takes seven years.

6. Keep Checking Your Credit Report

Monitoring your credit is not something that you do once and never do again. Once you have cleaned up your credit report, it does not mean that your credit will stay that way forever. Make sure to check your credit report again to see if all the negative information was removed. Remember, keep your credit utilization ratio below 30%, pay your bills on time, and check your credit report yearly.

7. Work with a Credit Repair Company

Your credit report contains information that can make or break your financial future. Knowing about inaccuracies and mistakes in your credit report could save you from identity theft as well as help you to get approved for a loan or credit card with a lower interest rate.  It might even affect your ability to get a job.

Getting your credit score back on track can be a tedious and confusing process. Working with a credit repair company can be very helpful during this process. 

The Mortgage Ready Program offers an easy to follow program that helps you clean up your credit report and increase your credit score.  We evaluate your credit report and dispute inaccuracies with creditors and the credit bureaus.  We also work to remove negative information from your report. If you are ready to clean up your credit, let our experienced team take you by the hand and guide you through this process. 

[1]      B. McGurran, “What Does It Mean to Clean Up Your Credit?,” Experian, 2019. https://www.experian.com/blogs/ask-experian/how-to-clean-up-your-credit/.