How to clean up your credit report fast? Your credit report is very important when calculating your credit score. This is because your credit score is calculated based on the information reported in your credit report. Inaccurate information and other negative items on your report will directly affect your credit profile. For this reason, you need to constantly evaluate and clean up your credit report on a daily basis.
Unless you take action and fix negative items and errors in your report, you might find it difficult to qualify for many financial products. For example, a simple mistake reported on your credit report can make it harder to qualify for a better interest rate on car loans or a mortgage.
This article will walk you through 9 steps you need to take in order to clean up your credit report fast.
1. Get a copy of your credit report
The first step in cleaning up your credit report fast is to get a copy of your credit report. You cannot clean up your credit report without seeing it.
That is why you need to get your report as soon as possible.
The Fair Credit Reporting Act requires that all three major credit reporting companies give you a free copy of your report once every year. You can either get all these reports at the same time or get one report from each company every few months. In order to get your free credit report, visit AnnualCreditReport.com or call 1-877-322-8228.
There are three major credit reporting companies in the USA which are listed below.
- TransUnion
- Experian
- Equifax
Having all reports at once can help you see how they differ and what is being negatively reported on each report. It will also be helpful to see whether the information reported in these reports is the same. This gives you a better idea of how you clean up your report.
If you don’t like to have all three reports at once, consider having a few months between each report. For example, you can have a copy of your credit report from Experian in January, then another copy from TransUnion in April, and finally, the last copy from Equifax in September.
Keep in mind that you will get all these free reports from the website I mentioned above.
This will allow you to see how information in your report is being reported. If there are some negative items that were deleted from your report a few months back and were reported in your current report; you can dispute them and have them removed.
2. Read your report very carefully
Now that you have your report in hand, it is time to read it carefully. If you have all three reports from three reporting companies, carefully read each one of them and make some comparisons.
The people who put together your credit report are humans, and therefore, can easily make mistakes. On top of that, making everything in your report correct is not what they are in business for.
It is your responsibility to make sure that the information reported in your credit report is correct and that all negative items are deleted.
In other words, you are in charge of cleaning up your credit report. The more thoroughly you read your credit report, the more errors, misinformation, and negative items you will be able to catch.
Rebuilding your credit history and increasing your credit score is not an easy task. But the most important step you should worry about is understanding what is being reported in your report and how accurate they are. So, always read your credit report line-to-line to make sure that you are not leaving anything to chance.
Related: Credit Report Overview
3. Dispute errors in your report
After reading your credit report, make sure that you dispute any errors reported on your report. For example, if there is a credit card debt you finished paying off a few months back and it was reported as active debt, you should dispute this error to credit reporting companies.
By leaving this error on your report you risk having a reduced credit score due to increased credit utilization on your record.
How do dispute errors on your credit report?
Disputing errors on your credit report is a simple process. You just need to file a formal dispute form to the credit reporting companies that made your reports. Each reporting bureau has its own process of disputing errors from your report. You might have to complete a dispute form.
All reporting bureaus have options where you can call them, email them, or simply send in the form by mail.
Make sure that you have spelled your name correctly on the dispute form and completed the form correctly. You must also provide all supporting documents that justify why you think the information was reported incorrectly.
For example, if you are disputing a fully paid-off debt, you can include all receipts you received from the loan provider detailing all payments you made and your final account balance which in this case will show zero dollars. You can also work with your loan provider at the same time to make sure that fully paid off loans will not be reported as active loans in the future.
Another good example is misspelled names. If you think your report has a misspelled name, provide all information necessary that shows your correct names. The required document will vary from one error to another.
4. Make a goodwill deletion request to remove unpaid balances on your report
At this point, you have evaluated your report, dispute errors, and finally, you are at a point where you are left at the mercy of creditors. Your journey to clean up your credit report fast is not over yet. You still have a lot to do with your report.
Your past financial decisions should not define your future. Also, it may not be impossible to be financially fit your entire life. There are times when you might end up in a costly financial situation such as a divorce which will affect your ability to make regular payments.
If you have any late payments that have been reported on your credit report, you can have them removed. The best and easiest way to do that is to work directly with your creditors.
In order for them to delete such negative items from your report, however, you need to show them that you are serious about cleaning up your report and the action will benefit both parties.
You will do this by submitting a goodwill deletion request to your creditor. What this letter means is that you sincerely request that the creditor deletes such a negative item from your profile. In order to motivate them to do so, you can make up a full payment of the remaining amount or missed payment. This works better when you have a good history with your lender.
At the end up of the day, your moneylender benefits nothing if your credit history and credit score are wrecked.
5. Make all your payments on time
As a person who is trying to clean up your credit report fast, you should avoid any activity that will jeopardize your credit report further.
Since your payment history is the biggest thing that affects your credit score (35% of your credit score); you need to make sure that all your payments are in full and on time.
For example, if you have balances on your credit cards, make your payments before the due date of each month. Some people confuse the balance due date and statement due date. These two dates are different. Your due date is always before the date at which your statements are released.
Each credit card comes with its own statement date and balance due date. So, make sure that you make all your payment before the balance due date.
This will prevent you from carrying over the balance to the next payment period which may turn into a late payment. Also, you will avoid paying interest by making all your payments on time.
Related: How does payment history affect credit score?
6. Reduce your credit utilization ratio
Credit utilization also known as credit use or credit usage represents the amount you have spent compared to the credit limit you have. Credit utilization affects your credit score by 30%. To know what your credit utilization ratio is divide how much you spent by your total credit limit. If you want a percentage, multiply your result by 100.
For example, if you have two credit cards with $1,000 and $3,000 credit limits consecutively, your total credit limit on these two cards is $4,000. If you spent $3,000 out of this limit, your credit utilization ratio will be 75% (($3,000/$4,000)x100). This credit utilization(75%) is considered high and will lower your credit score.
Having a higher credit utilization shows that you are relying on debt to finance your expenses. This is a direct indication that you might not have enough income to cover your lifestyle. Hence, making you a risky borrower.
Experts suggest that you keep your credit utilization lower than 30%. However, I think that a 30% credit utilization is still high. If you want to clean up your credit report fast and increase your credit score, keep your credit utilization ratio under 10%. A low utilization will boost your credit score and make it easy to pay them off every month.
7. Pay off your collections
When you have debt in collections it means that your original lender has sent the debt to a third-party person or agency to collect it.
Unless the debt was sent in collections by error which you should have disputed in step 3 of this article; you need to pay off your debt in the collection to clean up your credit report fast.
Debt in the collection does not necessarily get removed from your credit report right away. It might take time to have everything removed. However, a paid collection usually has less weight on your credit score compared to unpaid debt. So, if you have debt in collection, make sure that you pay it off.
8. Avoid applying for credit excessively
When it comes to cleaning up your credit report fast, you need to avoid any financial decisions that will cause more harm to your credit report. One of these activities is to apply for more credit.
When you apply for more credit such as an extra credit card or a car loan, the lender will request to see your credit profile. This will result in a harp pull or hard inquiry on your credit report.
Hard inquiry knocks off about 6 points from your credit score and they stay on your report for about 2 years. But, they do not affect your score after one year.
One hard inquiry might not be too bad on your report. But multiple inquiries could potentially mess up your credit score and make it harder to clean up your credit report fast.
Related: 9 Things to know before getting a credit card
9. Have your rent, utility bills, and other payments submitted to credit bureaus
If you have not known it or done it already, your utility bills and rent payments can help you rebuild your credit score and clean up your credit report.
Most people do not submit rent payments or other business dealings to credit bureaus. Once submitted, these payments can help you rebuild your credit score. As long as you pay them on time, they can add a little push to your speed.
Your main goal in cleaning up your credit report is to dispute errors, correct inaccuracies, and replace negative items with positive ones. So, by submitting everything positive to credit reporting bureaus, you get to clean up your credit report faster.
Summary
It is your responsibility to make sure that all information in your credit report is correct. At the same time, you must take action to clean up your credit report by disputing errors in your report, eliminating negative items, and taking other steps necessary to keep your report healthy.
Your credit score is directly affected by information in your credit report. So, by cleaning up your credit report, you should see a direct effect on your score.
