4 Steps to Clear Up Your Credit Report

No matter the many unique traits that comprise our individual identities and separate us from the next person, underlying life details ultimately end up dictating what’s available to us. In the United States, this is evidenced in a no more explicit way than our credit report.

Detailing our payment history, credit utilization ratio, length of history, credit diversity and the number of hard inquiries come together to help lenders form an overall opinion of who we are as borrowers.

But as pivotal as these reports are to help us secure a loan or get a better interest rate on a credit card, they can also contain errors and outdated information.

To freshen your lending appeal, here are four steps to clear up your credit report.

Get Your Report; Check the Basics

It might sound obvious to make sure basic information like your full name, address and social security number are correct, but the effects of uncorrected errors can hurt credit scores and potentially, result in creditor suits or collections notifications. Inaccurate personal information also puts your identity more at risk of being stolen or merged with someone else’s.

According to the FTC, one in four consumers identified errors on their credit report that might affect their credit score. If you’ve never checked a copy of your credit score before, it’s a good idea to request a free copy from the three credit reporting bureaus: Experian, TransUnion or Equifax.

Monitor Your Report and Dispute Discrepancies

Make a habit going forward to request a free copy of your credit report every three months to ensure information is accurate and up to date. Keep in mind that you’re also entitled to check your credit report for free should your score get you denied from a job or new credit line. It’s important to monitor your report for changes, inaccuracies and discrepancies because disputing them usually works. The FTC states that four out of five consumers who filed disputes experienced some change to their credit report.

Hire a Credit Repair Company

A credit repair company has no more power than a consumer does when it comes to correcting errors on a credit report. If information is accurate, both parties also have no control in getting anything removed or changed. However, per the FTC study above, about one in 20 consumers had errors on their credit report that could drastically lower their scores.

If you do seek to work with a credit repair company, make sure you do your research. As always with debt and financial measures, scams are a possibility. Legitimate companies will not only ensure all your information is correct and disputed in a timely manner, but they’ll also educate you on how to deal with your existing financial accounts to maximize your credit score. Avoid companies that make guarantees, especially about their ability to remove negative marks from your credit score.

Prevent Legitimate Negative Marks

There are strategies for clearing up inaccurate or outdated information. However, the only remedies for keeping negative creditor marks off a report are waiting for the reporting time limit to expire (usually around seven years) and stopping overspending in the first place. Whether you’ve already damaged your credit score by declaring bankruptcy or undergoing debt settlement, you’ll now have some time to wait for your mistakes to go away. A great way to “do the time” is to couple the waiting with prudent financial behavior, which you’ll need anyway if you want to avoid future negative marks.

Limiting overspending transcends every corridor of life. What is necessary and what is not? What is moderate and what is excessive? Does the way we spend provide a sense of fulfillment or longing? These questions and more should help draw the lines on how to live a more disciplined financial lifestyle. Common advice that can’t do you wrong are Dave Ramsey’s cash-only diet, Andrew Housser’s advice to give less with our pockets and more with our heart around the holidays, or Warren Buffet’s evergreen mantra to learn how to save early.

Armed with these five steps to clear up your credit report, it’s only a matter of time before your report shines to creditors and helps get you friendlier terms.