Tips for Cleaning Up Your Credit Report
Many people have some form of bad credit. Negative items on your credit report can result in a higher cost of borrowing to you (interest rate) or even lower your chances for obtaining financing. However, bad credit is not the end of the world. There are even a few things you can do to clean up your credit report that may help you get better loan terms the next time you apply for a credit card, mortgage, or car loan.
Credit bureaus, also known as credit reporting agencies, collect information about consumers and then sell that information. The information can be seen by creditors when you apply for almost any sort of loan.
The credit bureaus get their information from the various creditors who you have done business with in the past. If you had late payments, defaulted, declared bankruptcy, etc then the creditors most likely notified the credit bureaus of that status.
Getting a copy of your credit report is the first step in cleaning it up (how to get a free credit report here). Once you have a copy, you can see what sort of information is available to your future creditors. Review your report carefully, once you have obtained it. If you find any derogatory items that are incorrect or inaccurate, you can contact the credit bureaus to file a dispute.
When you dispute an item on your credit report, it must be re-investigated. If the truth of the matter cannot be discovered within a reasonable amount of time by the credit bureau, then the negative information must be removed from your credit report.
Also, at your request, the credit bureaus will resend your corrected credit report to anyone who received your report within the six months prior to the correction. Job applicants can have their corrected credit report sent to anyone who received a copy in the last two years for employment reasons.
Before you do anything else, verify the information in your credit report and dispute any negative or incorrect information. It can make a big difference in what it costs you to borrow money.