How to Clear up a Bad Credit Rating

A bad credit rating can negatively affect your financial future. If you want to buy a house, a car, or other large purchases, you may end up with a VERY high interest rate. It could make it all but impossible to buy the things you want--or even need--so it’s in your best interest to clear up your bad credit rating NOW!

Here are a few things you can do to clear up your poor credit rating:

  • Get a credit report -- If you haven’t taken a look at your credit report in a few years, it’s time to do so! You’ll be able to see what is ruining your credit, what your credit score is, and more. Annual Credit Report gives you a summarized version the credit report that you are entitled to receive from each of the three following organizations:
  • Search for discrepancies -- When looking over your credit report, keep an eye out for discrepancies in your information. While it isn’t likely, there is a chance that there is an extra account included in your credit score--affecting it negatively. If you see anything on your credit report that you don’t recognize, let your credit bureau know. If you find an account with a very high balance that isn’t yours, it could seriously affect your credit score.
  • Look for old information -- Most of the negative information on your credit report should be erased after 7 years, and Chapter 7 bankruptcies should be erased after 10 years. If your credit score is bad, it may just be that the old negative information hasn’t been removed. If this is the case, inform your credit bureau so they can fix the error.
  • Look for "phantom" debts -- After a time defaulting on your credit card debt, the lender will sell it to a collection agency. However, they may forget to return your account with them to zero, so you end up with double debt showing up on your credit report. The more times your debt is bought and sold between agencies, the higher the risk of mistakes like this.
  • Dispute mistakes -- If there is a mistake in your credit report, it’s in your best interest to dispute it. Any mistakes could affect your credit score, and resolving those mistakes can help to improve your credit rating drastically. Contact the bureau from which you requested the credit score, and follow the process of disputing account errors. (Note: If it’s negative information older than 7 years, contact the lender, not the credit bureau.)

Once you’ve done all this, make sure to follow up on your disputes with both the lender and the credit bureau. It’s the best way to ensure that mistakes on your credit report are corrected, thereby helping to improve your credit rating. Your credit report should note that the date of the corrections, so read the report to ensure that the credit bureau followed through on the correction process.

The Federal Trade Commission has a page dedicated to helping you clear up your credit rating. Check it out to find out more…


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