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The Debt Adviser

How to clean up your credit report

Dear Debt Adviser,
How do you remove information that is inaccurate and false from your credit report? How do you clean up several negative reportings?

Dear June:
I have good news and I have bad news.

The good news first: The Fair Credit Reporting Act outlines an established procedure for disputing incorrect or inaccurate information on a credit report.

The first thing you need to do is request a copy of your credit report from each of the three major reporting agencies: Equifax, Experian and TransUnion. A small fee may be charged depending on the state in which you reside. If you have been refused credit or turned down for housing or insurance in the last 60 days, you may qualify for a free copy of your report.

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After you receive your credit reports follow these steps:

  • Contact the credit reporting agency that issued the report and dispute the incorrect or inaccurate information. You may dispute an item by phone, mail or online.

  • You will need to provide your Social Security number, date of birth, current address, company name of the disputed item (found on your credit report), account number of the disputed item and reason for your dispute. Examples of reasons for a dispute include: the item does not belong to you; current balance is not correct; the account is closed or the account has been paid off.

  • The Fair Credit Reporting Act provides that the agency must investigate the disputed item(s) and correct or delete the inaccurate information (usually within 30 days). The agency is required to give you a written report of the investigation and a copy of your report if the investigation resulted in any change.

  • You can also report disputed credit report items directly to the creditor. As a result of your dispute, the creditor can not report the information to an agency without including a notice of your dispute. Once you have notified the creditor of the error in writing, it may not continue to report the information until the situation has been researched.

Now for the bad news.

A credit reporting agency keeps reporting all accurate negative items for seven years, 10 years for Chapter 7 bankruptcies. But all is not lost. There are some things you can do that will make a negative item appear a little less negative by raising its numeric score.

  • Pay off any old debts that are reported as write-offs by the creditor. The debt will still appear as a write-off on your report, but it will also show that the balance was paid in full.

  • You may submit, to each of the credit reporting agencies, up to a 100-word written statement that must be added to your credit report explaining a negative item. You may want to include the circumstances under which you defaulted on the loan such as job loss, illness or any other extenuating circumstance in the statement.

It is a good idea to check your credit report once a year to avoid any unwanted surprises at the car dealership or mortgage loan officer's desk. Any incorrect information should be disputed right away. Just as important, make sure the car note you finally paid off and the personal loan you paid off early are included on your report. You want all accurate information to be reported.

Remember, although not just anybody can request a copy of your credit report, employers, apartment leasing offices, insurance brokers and others with a need recognized by the Fair Credit Reporting Act can access your report. It is, therefore, more than worth your while to make sure your credit file accurately represents your credit worthiness.

The Debt Adviser, Steve Bucci, is the president of Consumer Credit Counseling Service of Southern New England. Visit CCCS for additional debt advice or click here to ask a debt question.

-- Posted: Aug. 23, 2002

See Also
How to get a free credit report
Consolidate your debt: 8 ways to get credit help
Financial advice glossary


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