2. Examine your reports carefully.Nearly every consumer has an error on at least one credit report from one of the major credit bureaus, says Rhode. Credit bureaus generate your report on information they receive from your creditors, and they don't verify the information.
Keeping your credit report a true reflection of you is -- like it or not -- your job. Get ready to clean and polish. Carefully look for errors including typing errors, outdated and incomplete information and inaccurate account histories. You'll want to make a thorough list of items you dispute and the reasons why. Be meticulous.
If the negative information in your report is true, only time and improved habits can change that. Late payments and charged-off accounts remain on your report for seven years, some bankruptcies for 10. Most creditors, however, look for a pattern of payment rather than focusing on one-time or rare occurrences; so consistent on-time bill payments will improve those blemishes.
3. Double-D strategy -- dispute and document.Remember, a bad report costs you money. You can either complete the dispute form provided with your credit report or write a letter. Clearly identify each mistake and state why it's wrong. A recommendation is to send a photocopy of your credit report with the mistakes circled to the reporting credit bureau.
Include copies of supporting documents. Keep copies and records of all the forms, letters and documentation that you send the credit bureaus, plus dates sent. The credit bureau must investigate any relevant dispute within 30 days of receiving your letter. Any item that is not verified as accurate by a creditor is removed.
Sometimes it's necessary to contact your creditors to resolve mistakes.
If the credit bureau makes any changes to your credit file, it will send you the results and a free, updated copy of your credit report. Once a negative item is removed from your report, the credit bureau cannot put it back on unless a creditor verifies its accuracy and completeness -- and sends you written notice.
4. Solve and dissolve debt.Now's the time to devise a spending plan that reduces your debt and sets you up to pay on time, every time.
If you're having difficulty making payments, be proactive. Call your creditors and negotiate to keep your accounts current and from being reported as delinquent or "bad debt." You can ask for reduced monthly payments or even change due dates to balance out your monthly bills.
The same strategy can be used for fixed-loan payments. Remember, though, that this is a short-term strategy. You'll pay more interest to extend the repayment schedule, but it allows you to stay current and save your credit rating. Use the extra money to pay off debts one at a time, gradually increasing payments to other debts.
Deal with any collection accounts. Unpaid collections are worse than paid collections. You can negotiate a payoff settlement that reduces your bill, plus demand that all derogatory remarks are removed from your credit report or at least reported as paid in full. Be sure to get all agreements in writing before sending off your payment.