How to Clean Your Credit the Legal Way

Before heading to a car dealership, mortgage lending office or employment line, clean up old, inaccurate and incomplete credit information from your credit report. A good credit rating can qualify you for lower interest rates, more attractive loan products and higher paying jobs. While not all employers consider an applicant's credit history when making employment decisions, many do. Clean up your credit using several effective credit repair tips.

Instructions

1

Request, view and print your credit reports. Go to Annual Credit Report's website where you can request, view and print one free credit report from each of the three nationwide credit reporting bureaus. Enter your full name, state of residence, Social Security number and date of birth.

2

Clean up incorrect or incomplete credit information. File an online dispute form to clean up incorrect information on your credit reports. Enter the name of the lender or creditor, the credit type (i.e., student loan, line of credit or bank loan) and account number. Briefly explain why the information is incorrect or incomplete.

3

Clean up out-of-date credit information. Look for adverse information that's more than seven years old; bankruptcies reported more than ten years after the date of the last activity; and credit inquiries more than two years old, according to NoLo, a website dedicated to providing legal information to families and businesses. Submit an electronic request to remove the out-of-date information from your credit report.

4

Settle past due or delinquent accounts. Past due and delinquent accounts adversely affect your credit rating. If you cannot pay down a past due account, settle the debt for a lesser amount. As a general rule of thumb, the longer an account is delinquent, the more likely a lender will accept a lump sum pay-off for less than the balance. Start your negotiations low and work your way up to an amount you can reasonably afford. Negotiate for the best final credit rating, including removing charge-offs from your credit report. "Paid as agreed" would be the best outcome.

5

Restore your credit. Pay down lines of credit on time each month. As a general rule of thumb, pay down credit lines to within 30 percent or less of your credit limit to maintain a low card utilization rate. A high card utilization rate suggests a weak financial standing.