Seven Smart Steps to a Cleaner Credit Report

The cleaner your credit report, the higher your credit rating, and the better your chances of getting financing. Several factors contribute to a bad credit report such as poor habits and credit report mistakes. But with a proactive attitude, you can clean up your report and improve your score.

Check History

Cleaning up your credit report and boosting a low score first involves checking the contents of your report. Order a copy of your report online from Annual Credit Report. Have a marker or ink pen nearby, so that you can make a notation or circle entries on your report that need attention.

Credit Card Balances

Creditors are supposed to update your credit report regularly, which involves updating your balance on credit cards. Higher balances lower your credit score, whereas reducing or paying off credit accounts help improve your rating. If you recently paid off or paid down an account, check your report to make sure that your credit updated this information. If not, call the credit card company and ask them to update your report.

Late Payments

Creditors may erroneously report an account as late on your credit report, which also negatively impacts your credit score. Report the mistake to your creditor and ask them to remove this mistake from your report. A good payment record is crucial to building a good credit rating.

Inquiries

Credit checks harm your credit score, and having too many on your credit report shaves points off your rating. Stop applying for new credit accounts unless necessary. Shopping for a mortgage or auto loan are justifiable reasons for submitting a credit application. However, routinely applying for store credit in order to save 10 percent on a purchase can damage your rating.

Identity Theft

It's not impossible for someone to steal your identity and open an account in your name. They can do so with your name and Social Security number. Keeping your private information safe is key to protecting yourself. But if you become a victim, notifying the credit bureaus and creditors immediately is imperative to getting fraudulent accounts off your report.

Rapid Rescoring

Some consumers are unaware of a provision called rapid rescoring where creditors agree to update credit reports within three days. Applying for a mortgage or other loan may reveal credit report problems. However, a lender may approve your application if you can quickly correct the problem.

Co-signing

Co-signing is a potentially dangerous decision that can result in a lower credit score and negative information on your credit report. Before agreeing to co-sign a loan agreement for anyone, make sure that the person you're helping can make the loan payments. If not, you'll have to either make the payments or suffer the credit consequences.