Credit History Advice

In many ways, life in the United States revolves around credit; more specifically, your credit history. Good credit can help you qualify for excellent interest rates on mortgages and auto loans, and bad credit can keep you from qualifying for these loans at all. Learn how to improve your credit history, also known as your credit report.

Clean Up the Past

Collection accounts, charge-offs and judgments negatively affect your credit no matter what. While getting these items removed is nearly impossible (most bad accounts take 7 years to come off), settling the accounts can improve your overall credit report and show lenders that you are trying to correct your mistakes.
Contact creditors you have had problems with in the past, and offer to settle the old debt. Regardless of what you have seen in advertisements, "pennies on the dollar" resolutions are highly unlikely. Nevertheless, most creditors will settle your account and consider it satisfied if you work out a payment arrangement with them. The initial payment default will still appear on your credit history, but the account will be marked satisfied, improving your chances of acquiring new credit.

Review Your Credit Report Quarterly

Review your credit report every 90 days to check for inaccuracies. With the complexity of the credit system, it is possible for creditors to place inaccurate information on your credit history. Checking it every 90 days will minimize the negative effect of any inaccuracies and give you an opportunity to correct it before it is too late.

If you find an inaccurate item on your credit history, dispute it. Dispute the account with the lender and the credit bureau agency. By law, a lender has 30 days to provide proof of an item before it is removed from your report.

Don't Close Inactive Accounts

Many people make the mistake of closing a revolving credit account (usually a credit card) that they no longer use. Unless you have an annual fee, keeping an account open will not cost you any money. A zero balance accrues no interest and increases your available credit, which raises your score. A closed account reduces your available credit and can lower your credit score.