How to Fix Your Bad Credit Report

Your credit report is one of the strongest pieces of identifying data available about you. This report contains a financial picture of you that most companies see before they even meet you! With a picture being worth a thousand words, this financial photo says a lot about who you are. It tells creditors where you have lived, where you have worked, and most importantly- how you manage your finances.

If you have kept a close and watchful eye on your credit report over the years- Congratulations! I would recommend that you check your report consistently every six months or more often if you feel you may be the victim of identity theft. There are a lot of services being offered now that will monitor your credit report monthly and alert you of any changes, for a fee. I do not recommend doing this, because that monthly fee could be going in a savings account for you! Continue to monitor you credit report on a regular basis on your own, and alert the credit bureaus if you notice unauthorized inquiries or opened accounts.

I have friends and family members that have never checked their credit report. Throughout the years, they have undoubtedly applied for credit with landlords, utility companies, department stores, and various other companies. They have shared this financial photo with scores of stranger, and yet know not of what it contains about them!

There are three major credit bureaus that collect data about your credit worthiness.

Experian
Equifax
Transunion

Each agency compiles their own information, and not all three will have the same data available. Credit reports are notorious for having incorrect or obsolete data. Your first task is contacting each of the three major bureaus and requesting your personal credit report. You will be asked to provide your name, address, and social security number for identification and verification purposes. Credit reports have also been made available free of charge if you meet certain requirements.

Once you have ordered your credit report, expect to wait about 10 business days for it to arrive. The copy that you receive will be valid typically for 30-60 days depending on the agency. This timeline is important, because once it arrives, you must check it and contact the credit bureau with your dispute of any inaccurate information quickly.

The first thing that you want to check is the spelling of your name and checking the addresses that are listed on your credit report. Identity theft is growing fast. Your name being misspelled or an address listed on your credit report that you have never lived at are both red flags. Someone could have come across some of your personal information and applied for, or acquired credit in your name.

The credit bureaus are not creditors, but more so giant electronic warehouses of information. Companies collect information about you and send it to their credit bureau of choice. Some companies may send information to all three bureaus, while others may elect to send information to only one or two. With all this information flying around, there is no wonder we find so many inaccuracies in our credit report.

The dispute process is used to alert the credit bureau of potentially inaccurate information on your credit report. This could be as a result of identity theft, outdated information, or just completely wrong. The procedures for disputing information on your credit report vary for each company. Some allow you to begin your dispute over the phone, while others require that you fill out a form and mail it in or both. Make sure that you read your credit report carefully to understand what the procedure is before you begin. The telephone option is the quickest, while I have found the mail option to be a very time consuming process.

My first piece of valuable advice to you is- Dispute every derogatory account on your credit report. This is the easiest step to help you clean your credit.

Each credit report will list accounts that you have had within the last 7-10 years. Make sure that the accounts listed are accounts that you were aware of. If you have never had a cellular account with Sprint, but a Sprint bill is on your credit report- dispute it. Another thing to look out for is an account that has been paid, but is showing as unpaid on your credit report. All of these little inaccuracies ad up to big points when it comes to your credit score. More on that later!

I would like to go back to a previous statement. I don't believe I emphasized it enough. Dispute every derogatory account on your credit report.

When you dispute an item on your credit report, the credit bureau then has to send that information back to the company that listed the item on your credit report to begin with. That company, in turn, has 30 days to research your dispute and provide proof to the credit bureau that it is indeed your account and it is delinquent. If the company does not provide that information to the credit bureau after that 30 day period- it comes off of your credit report completely.

I did not believe this the first time I was told about it, but I tried it anyway. Seven derogatory accounts were removed from my credit report and my credit score jumped 20 points! What I later found out is most collection agencies are so overwhelmed that they usually cannot gather the required information to respond to the credit bureau within the 30 days.

Correcting your credit reports can take 2-3 months to complete. Be patient and stick with it. This first step will not only help you to gain a better understanding about your credit and the impact it has on your life, but it will also help to make you more aware about applying for credit. Once you have worked so hard to clean it up, you will think twice about messing it up again!