If you have been through financial difficulties, you probably have some black spots on your credit history. Even if you have never made any late payments, errors against you could appear on your credit reports. Because your credit history and credit score have such importance for your future borrowing and even your future job hunting, you should make cleaning up your credit history a high priority.
Major Credit Reports
Find out the extent of the damage. Obtain and examine reports from the three main credit bureaus: Experian, TransUnion and Equifax. They may have different information about you, and, in any case, you need to ask them to make corrections separately. Get a free copy of each report at AnnualCreditReport.com, as Bankrate.com adviser Steve Bucci suggests. You can also contact each bureau separately online to order your report. Having the online report will facilitate making corrections online later.
Errors Worth Correcting
You should not worry about slight errors in your name, address or employment history on your credit reports, according to Liz Pulliam Weston at MSN Money. You should, however, identify untrue reports of late payments or overdue accounts, credit limits that show up lower than the actual ones or outdated information. Bankruptcy information remains for 10 years; most other information should disappear after seven years. Note any old bills marked unpaid that you have since settled.
Correcting Mistakes
Once you have discovered mistakes, dispute them in writing or online with each bureau whose report contains errors. According to Jane Bryant Quinn in "Making the Most of Your Money Now," the bureaus have to verify your claim with your lenders and make corrections within about 25 days. If you have proof of payment or other supporting documents, submit them to the bureaus as well.
Following Up
After giving the credit bureaus time to remove the negative information and make corrections, check to make sure the corrections were made. Then request that Experian, TransUnion and Equifax give the correct information to the other credit bureaus to which they report. If the false information remains, Bucci suggests you contact the creditors directly and ask them to intervene.
Difficult Cases
Mistakes do not give you grounds for a lawsuit, according to Quinn. However, you may want to sue if a creditor does not fix an error that you have proven. The credit bureaus must show that you have disputed a particular item. If you believe you may have grounds for a lawsuit, she recommends locating a lawyer specializing in credit through the National Association of Consumer Advocates.
Building and Maintaining Good Credit
Your financial habits affect your credit history during the clean-up process and going forward. Practice good credit management or all your hard work will fail. Pay down your debt so that you are using less than 30 percent of available credit. Pay all your bills on time without exception. Use your older cards with some frequency to maintain a long history. Keep at least two credit cards, but don't open new accounts if you already have two or more.
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