Cleaning Up Bad Credit & Raising a Credit Score

Cleaning up negative entries on your credit reports is just the first step in raising your credit score. Getting rid of the negative entries should give you an immediate boost, but continued improvement will likely be tied to your ability to make timely payments on your existing accounts. Generally, a string of on-time payments over 12 to 24 months--on all of your accounts--is the best strategy for improving your credit score.

Instructions

1

Get a free copy of your credit report from the website Annual Credit Report. The three nationwide credit bureaus--TransUnion, Experian and Equifax--created the site to offer the free reports as required by federal law. Visit the homepage and click on "Request Report" to see and print your report, or call 877-322-8228 to order by phone.

2

Review your credit report for inaccurate information. Federal law requires the credit bureaus to remove any incorrect information within about 30 days after being notified by you. Your report may be showing an outstanding tax lien that has been paid, or may list an account that does not belong to you. An account that you know is current may be reporting as past due. Clean up your report by challenging the inaccuracies. Write a letter to the credit bureau pointing out the mistakes and mail it to the address on the credit report. Or dispute the information online by visiting the website for the credit bureau and clicking on the "Disputes," or similar, menu tab. You must enter a reference number from your credit report to enter disputes online.

3

Identify accurate information on your report that is negative. Look for accounts that are reporting as past due, or have been listed as charged-off or as collection items. These are very bad entries on your report, and you should clean them up as you attempt to raise your credit score. Charge-offs are accounts that were closed by your creditor because you stopped making the required payments. Collection accounts are charged-off accounts that were sold to debt collection companies. Make payments to bring all your delinquent accounts current, and then contact creditors or debt collection companies to resolve the charge-offs and collection accounts. Ask the creditors or debt collectors to delete the negative entries from all three of your credit reports in exchange for a full payment--a process called pay for delete. The creditors aren't obligated to grant your request, but some might. You could also ask to settle the accounts for less than the full amount due, which is called debt settlement. The New York Times reported in 1999 that some credit card companies were willing to settle accounts for as little as 20 percent of the balance. If you really want to negotiate, try for both pay for delete and debt settlement. That would resolve the old accounts, save you money and remove the negative entries from your credit reports. Continue rebuilding your credit score by making timely payments on all your accounts.