Saturday, January 30, 2010

Three Easy Steps to Clean Up Credit Report Issues

There are three major credit reporting bureaus, and each of them holds your future in their hands. Using data obtained from banks, collection agencies, and landlords, the bureaus create a report and an aggregate score that will determine your ability to get more credit and afford the things you need in life - such as a new car or a mortgage for your home. So, for many, it becomes paramount that they clean up credit report errors and issues as soon as possible.

1. Review Your Report

Start by requesting free copies of your report from the three major reporting bureaus. Each bureau needs to provide at least one free report each year to anyone who asks, as per the Fair Credit Reporting Act. Use this information to determine if you need to clean up credit report issues related to inaccurate information.

2. Deciding What to Dispute

Once you have analyzed your situation and determined what issues there may be, it's time to decide if you are willing to dispute any of the items that have been reported. For the most part, almost any negative item can either be disputed or discussed with someone. If an item is inaccurate, was not done by you, or seems suspect, dispute it immediately. This includes late payments, charge-offs, collections, low limits, wrongly listed accounts, unpaid accounts that were settled in bankruptcy, or any negative items older than seven years.

3. When to Push and When to Lay Off

There are some issues that should not be argued too forcefully and for good reason. These issues can be detrimental to your report if you have them repaired, due to goofy parts of the FICO scoring system. Things you should ignore include employers being wrongly listed as current, inquiries that did not occur, outdated or incorrect addresses, and misspellings of your name. Of course, there are exceptions to all of these, such as identity theft or delinquent accounts related to these errors. But, if it is just a typo, do not expend effort getting it fixed as it will not affect your score.

By knowing how to get the data from your credit report, what to dispute, and where to draw the line, you can effectively remove any of the old errors that have been plaguing your credit report for years. And going forward, you will hopefully be able to monitor your credit and keep it from ever becoming an issue again.

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