Steps to Erase Negatives on Your Credit Report

Negative information on your credit report affects the interest rate on your mortgage, car loan and credit cards. In some cases, it prevents you from accessing credit. It shows lenders that you are a risky borrower undeserving of trust. Ideally, you'd never miss a payment, get disorganized or fall behind. In the real world, people are striving to pay down debt, save more money and improve credit scores.

Obvious Inaccuracies

Order copies of your report from Equifax, Experian or TransUnion to see what you're dealing with. You can get a free copy each year at AnnualCreditReport.com. A 2004 study conducted by the U.S. Public Interest Research Group found that 70 percent of credit reports contained inaccuracies. Furthermore, one in four reports contained serious errors resulting in higher interest rates. Common errors included: incorrect names outdated or confused with someone else (54 percent), closed credit accounts listed as open (30 percent), incorrect reporting of loan nonpayment (25 percent), the same mortgage or loan listed twice (22 percent), missing positive payment history (8 percent) and accounts opened without consent. Dispute inaccurate charges by writing, phoning or emailing any of the bureaus.

Deal Directly with Creditors

In some cases, you see the negative history and know, deep down, that it's all accurate. That doesn't mean you have to live with it. Settle unsecured Visa, MasterCard, American Express and Discover Card debt for a lesser amount than what you owe or establish a reasonable payment plan if you're struggling. If you pay 100 percent of what you owe in one or two large lump sum payments, request that the creditor remove all negative information from your credit report as part of the contingency.

Disputing Mistakes with Bureau

Dispute bogus information on your report online. Click a "Dispute this item" button and enter an explanation of why that information is incorrect or inaccurate. The credit bureau is then required by law to investigate. If your creditors send verification of your debts within 30 days, then the information drops off your account. If the creditors do send proof, nothing changes but you will at least have a detailed explanation for your records. As you can imagine, creditors can be inundated with many requests, so the chances of the debt dropping off your record are fairly good.

Be Patient

Did you know that negative information automatically drops off your records after the statute of limitations has passed? This may sound hard to believe, but generally speaking, late payments, Chapter 13 bankruptcies, foreclosures, accounts in collections and public records expire within seven years, whether you've paid them or not. Chapter 7 bankruptcies can remain up to 10 years, however, and unpaid tax liens may remain indefinitely. The older these negative items get, the less impact they have on your overall credit score, so you can begin improving your history by making timely payments.