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How to clean up credit reports

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Just as you would tidy up and organize your closets or garage, you should make sure your credit report is clean. Your credit history is the foundation of your financial life. The information in that report is the basis for your credit score, which is used to decide whether you get a loan, how much you pay for the loan—even how much you’ll pay for other products, such as insurance.

Good news: You can get your credit report for free at myBankrate.

If you haven’t taken a look at your report in a while, don’t wait until you’re about to make a big purchase to look under the hood. Some issues take time to sort out, and if you’re racing against the clock to secure a loan, you’ll wish you’d paid attention sooner.

1. Monitor your credit report

Federal law entitles you to a free copy of your credit report once every 12 months from each of the major credit-reporting agencies: Equifax, Experian and TransUnion. You can get a free copy of all three bureaus’ versions of your credit report at AnnualCreditReport.com. Order one at a time and space them out over the year so you can check your credit report every few months.

If you’re getting acquainted with your credit history for the first time, you may opt to order all three at once. If you’re turned down for a job or credit, or you don’t get the best interest rate on a loan, you have a legal right to review your credit report at no charge. The letter you receive notifying you of the decision will include a number for you to call for more information.

2. Review your identification info

The most important part of your credit report is your identifying information: your name, address and Social Security number, says Natalie Lohrenz, strategic partner liaison at GreenPath Financial Wellness in Santa Ana, California. “People obsess over tiny fluctuations in their credit score,” Lohrenz says. “But what they should focus on is the question: Is it accurate?”

A serious error such as an incorrect Social Security number can have serious consequences and needs to be addressed immediately. After checking all the identifying information, look at the accounts and make sure they’re all yours. Keep in mind that some lenders, such as the financing companies that issue store-brand credit cards, probably will have a different name than the one on the storefront.

3. Check your report for discrepancies

Watch out for accounts you don’t recognize and verify that any accounts containing negative information belong to you. It’s possible someone else’s account information is included in your credit report by mistake. Another red flag to watch out for is an account with a much higher balance than what you carry. This could indicate mistaken identity or identity theft.

Jessica Cecere, who worked at CredAbility (now ClearPoint Credit Counseling Solutions) for over 25 years, says one common credit-report error is the inclusion of old, negative information that should have come off the person’s record. Most negative information stays on a credit report for seven years, and Chapter 7 bankruptcies remain for 10.

4. Dispute mistakes the right way

If you find a major mistake, order your credit report from all three credit bureaus to determine whether the problem is limited to just one report. Then, determine whether you need to take up your dispute with the credit-reporting bureau or the lender. If there’s someone else’s information on your report, or there are accounts listed that aren’t familiar to you, contact the credit bureau. All three bureaus have online dispute forms to help you quickly resolve credit-report errors.

“Taking things up with the bureau is easier because they have one set process,” says author and personal finance expert Steve Bucci. “There’s a dispute process in place so you can dispute any account with the same process, whereas when you contact the creditor, everyone’s a little different. It’s not as neat and simple.”

If there is negative information that’s more than seven years old or an outstanding balance that has been paid off, contact the lender directly.

5. Document everything

After you’ve filed a dispute, don’t just set it aside and forget about it. Store any supporting documents in a safe place and set a reminder for yourself to follow up on the matter. If a negative or incorrect item on your credit report is very old, the creditor may have been bought, merged or gone out of business, which makes documenting everything absolutely crucial.

Keep notes on the people you speak with at the credit bureaus and lending institutions. Note when you contacted them and the date any corrective action is supposed to be taken. Check your credit report after that date to make sure they followed through. The three credit bureaus “talk” to each other electronically, so a correction made on one report should be reflected on the other versions, too.

Benefits of cleaning your credit report

Going through your credit report with a fine-toothed comb and disputing any errors or old information can have the power to boost your score and make you a more appealing candidate for a lender to do business with. Carefully scan each of your reports to quickly identify any errors that could end up hurting you down the road. The better your score, the more likely you are to be approved for new credit and/or lower interest rates.

FAQs about cleaning your credit

How long does it take to fix your credit report?

The process still takes anywhere from one to six months, depending on the number of disputes you need to make.

How often should I check my credit report?

You should aim to check your credit report at least once each year. You can receive a free copy of your credit report once per year from each of the three major credit bureaus.

How do you get things removed from your credit?

If you come across an error on your report or negative information that should’ve been removed, you can dispute the items online or by sending a letter and any supporting documents to the bureaus to begin the process. The creditor or bureau will then review your dispute to determine if it’s legitimate. If they determine it is, you’ll receive an update detailing next steps. If not, you can still opt to submit additional claims.