How to clean up your credit report

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Cleaning up your credit report is a relatively straightforward process. While it may take some dedication and patience, your score can benefit significantly from the time you invest in learning how to clean it up.

There are three basic steps to a successful credit cleanup: review your report, dispute any errors and address issues with your current credit usage. Read on to learn exactly what you can do about your credit report.

Start by reviewing your report

First things first, you’ll need to get a copy of your credit reports from each of the three credit bureaus: TransUnion®, Experian® and Equifax®. These are the companies that keep track of your credit history, and each of them publishes a separate credit report.

You are entitled to a free credit report from each of the bureaus once every year by visiting AnnualCreditReport.com, a website backed by the federal government that is required to provide you a credit report upon request. After entering some personal information to verify your identity, you’ll be able to download one or more of your credit reports.

As you look to eventually clean up your credit report, you’ll want to take a close look at the following information:

• Accounts: Are there any accounts you don’t recognize? These could be cases of identity theft or mistaken reporting.
• Balances: Are any of the balances listed incorrectly? Credit reports aren’t updated in real time, but a payment you made more than a month ago should be reflected.
• Payments: Do you have any late or missing payments? These could be reported inaccurately, or you may be able to address them by making a payment now.
• Inquiries: Do you have hard inquiries listed? These inquiries occur when you’re applying for new credit, so make sure the listed inquiries reflect times you remember applying for a credit card or loan.

Taking a close look at your credit reports will give you a sense of what could be leading to a lower credit score. Your next steps will depend on exactly what you find when reviewing your reports.

If you’ve found inaccurate information, you’ll want to file a dispute with the credit bureau to have it removed. On the other hand, if you’ve found negative information that’s legitimate, you’ll want to take time to address it and make any necessary changes to your credit behavior. We’ve got you covered on both fronts below.

Take time to dispute inaccuracies

If you find any errors on your credit report, you’ll want to file a dispute with the credit bureaus to have that information removed.

Errors related to personal information, accounts, balances and payment history can all be disputed by writing a letter to the credit bureaus. In your letter, you’ll detail the reasons you believe the information is inaccurate and provide any evidence to support your claim.

You can use this detailed guide to filing a credit dispute for help with this process.

After you submit your dispute, the credit bureau will investigate within 30 to 45 days, after which you’ll receive information about the result of your dispute. If successful, the dispute will lead to the removal of the inaccurate information. If unsuccessful, you may need to provide additional information or accept that the negative item will remain on your credit report.

Even if you aren’t able to get negative information removed from your credit report, you can still make changes to your credit behavior that will help increase your score in the long run.

Address outstanding payments

Understanding the way that your credit score is calculated can help you make changes that will clean up your credit report over time. One of the most important factors in your score is payment history, so taking time to address any late or missing payments can help you clean up your credit.

Your payment history highlights how often you make on-time payments for your credit cards and loans. Making even minimum payments on time can help boost your credit score over time, and making payments in full is even better. Your credit report will reflect the on-time payments in the account history section.

Here are the key steps to take:

• If you currently have any overdue payments and you’re able to afford it, make a payment now. This can help prevent having an account sent to collections, which could have a significant negative effect on your score.
• If you have any upcoming payments, try to make at least the minimum payment on your credit card bill or loan. Keeping a balance on a credit card isn’t a great long-term strategy, but making at least minimum payments will show that you paid on time.
• If you have just one missed payment, consider reaching out to the lender to see if they can remove that item. If you have a good payment history with the lender in general, they may waive a single missed payment.

Your credit score tends to favor information that is more recent, so making adjustments to your credit behaviors now will lead to a clean credit report in the future as older information becomes less important.

Lower your utilization

In addition to payment history, credit utilization is one of the most crucial factors in determining your credit score.

Credit utilization reflects how much credit debt you have compared to your total credit available. You can find your current credit utilization by dividing all of your current credit debt with your combined credit limit across all your credit cards. For instance, if your total credit card debt is $375 and your total credit limit is $1,400, your credit utilization (375 divided by 1,400) is 27 percent.

In general, keeping your utilization below 30 percent will have a positive effect on your credit score. On the other hand, if your credit cards are all close to the limit, your high utilization can have a negative effect on your score. Work to reduce your overall credit card debt load, which will lower balances on your credit report and potentially improve your score.

Here are the steps to take if you are looking to get your utilization back on track:

• If you’re able to make a payment on your cards, consider doing so right away, even if your bill isn’t due yet. When your credit card company reports to the credit bureaus, you’ll want your balance to be as low as possible.
• Keep unused credit card accounts open, because they still add to your credit limit even if you aren’t using them. Having a higher credit limit can help you keep your total utilization lower.
• Find ways to avoid overspending with credit cards, either by spacing out large purchases or setting a budget that keeps your utilization under 30 percent.

Monitoring and working on your utilization is one of the best ways to make an immediate difference in your credit score, as this factor is updated every time your credit card companies report to the credit bureaus.

Work with a credit repair company

The process of cleaning up your credit is straightforward, but that doesn’t mean it comes easy. The credit dispute process can be burdensome, which is why it’s often helpful to get help from a credit repair company. These companies have experience working with people to communicate with the credit bureaus and get inaccurate negative items removed from their credit reports.

After calling a credit repair company, you’ll work together to review your credit report for potential inaccuracies, and then the company will reach out to the credit bureaus on your behalf.

Whether you work with a credit repair company or clean up your credit on your own, make sure you know the crucial steps. Start by reviewing your credit report for accuracy and areas for improvement. Next, file disputes for any inaccurate information that could be affecting your score. Finally, make key adjustments to your credit behaviors so that your credit report reflects the good credit habits you’re building over time.