How to Clean Up Your Credit Report

Clean up that credit report before you apply for a loan or mortgage.

Nolo

To clean up your credit report, you'll need to order a copy of your credit report, determine what's inaccurate or out of date, and then request that the credit bureaus fix the information. You may have to follow-up several times with each credit bureau before your credit report will be sparkly clean -- or at least accurate. To do this right, you'll need to know what the credit agencies are allowed to report and for how long.

Clean up that credit report before you apply for a loan or mortgage.

To clean up your credit report, you'll need to order a copy of your credit report, determine what's inaccurate or out of date, and then request that the credit bureaus fix the information. You may have to follow-up several times with each credit bureau before your credit report will be sparkly clean -- or at least accurate. To do this right, you'll need to know what the credit agencies are allowed to report and for how long.

How to Get a Copy of Your Credit Report

Everyone is allowed at least one free credit report each year. If you've already gotten yours this year, you may have to pay a small fee for one.

Free Reports

The federal Fair Credit Reporting Act (FCRA), amended by the Fair and Accurate Credit Transaction Act (FACTA), allows consumers to get a free copy of their credit report each year from each of the three major credit reporting companies. Free annual credit reports are now available in every state.

To order your free report, go to www.annualcreditreport.com, and either order your report directly or download a form to mail in your request. You can also call 877-322-8228.

Also, you are entitled to one free copy of your credit report each year under any of the following circumstances:

• You've been denied credit because of information in your credit report and you request a copy within 60 days of being denied credit.
• You're unemployed and looking for work.
• You receive public assistance.
• You believe your file contains errors due to fraud or you are (or you think you are) a victim of identity theft.
• You've been denied employment (or another adverse employment decision has been made) based in whole or in part on information contained in a credit report.
• Your report has been revised based upon an investigation you requested.

Credit Reports for a Fee

If you do not qualify for a free report (for example, if you have already ordered your free report for the year), there will be a small charge for your credit report. The amount will vary from state to state because it is mandated by state law ($3-$10, with most states charging $10).

The three major credit reporting companies are Equifax, TransUnion, and Experian. It's best to order your report from all three. To order directly from one of these credit bureaus, call, email, or visit the company's website.

Equifax
P.O. Box 740241
Atlanta , GA 30374
800-685-1111
www.equifax.com

TransUnion LLC
P.O. Box 2000
Chester , PA 19022
800-888-4213
www.transunion.com

Experian
P.O. Box 2104
Allen , TX 75013
888-397-3742
www.experian.com

Information Required

When you request your credit report, you'll need to provide the following information:

• your full name (including generations such as Jr., Sr., III)
• your birth date
• your Social Security number
• your spouse's name (if applicable)
• your telephone number
• your current address and addresses for the previous five years, and
• sometimes, even a copy of a government-issued I.D. such as a passport or driver's license and a copy of a recent utility bill -- both documents showing your current address and the date of issue.

How to Clean Up Your Credit Report

After you get your credit report, you'll have to read through it carefully, try to decipher some of the account numbers and names, and start correcting.

Out-of-Date Information

As you read through your report, make a list of everything that's out of date. The following out-of-date information should not appear in your credit report:

• adverse information older than seven years, including lawsuits, judgments, paid tax liens, accounts sent to collection, criminal records (except criminal convictions, which may be reported indefinitely), late payments, and any other adverse information
• bankruptcies older than ten years from the date of the last activity (usually the date you received your discharge or the date the case was dismissed, although credit bureaus sometimes start counting from the earlier date of filing)
• credit inquiries (requests by companies for a copy of your report) older than two years, and
• overdue child support older than seven years.

Note that some adverse information regarding U.S. government insured or guaranteed student loans, or national direct student loans, may be reported for more than seven years.

Inaccurate Information

Next, look for incorrect information, such as:

• incorrect or incomplete name, address, phone number, Social Security number, or employment information
• bankruptcies not identified by their specific chapter number
• accounts that are not yours or lawsuits in which you were not involved
• incorrect account histories, such as a history of late payments when you paid on time
• any closed accounts that are listed as open -- it may look as if you have too much open credit, and
• any account you closed that doesn't say "closed by consumer."

Request Removal of Bad Information

After reviewing your report, complete the "request for reinvestigation" form the credit bureau sent you, or send a letter listing each incorrect or out-of-date item and explain exactly what is wrong. Once the credit bureau receives your request, it must investigate the items you dispute and contact you within 30 days. If you let the bureau know that you're trying to obtain a mortgage or car loan, it can often do a rush investigation.

If you are right (that the information is inaccurate or incomplete), or if the creditor who provided the information can no longer verify it, the credit bureau must remove the information from your report or modify it based on the results of the investigation. Sometimes credit bureaus will remove an item on request without an investigation if rechecking the item is more bother than it's worth.

What to Do If the Credit Bureau Disagrees

If the credit bureau responds that the information is correct, call the bureau to discuss the problem:

• Experian: 888-397-3742
• TransUnion: 800-888-4213
• Equifax: 800-685-1111

If you don't get anywhere with the credit bureau, directly contact the creditor and have the creditor tell the credit bureau to remove the information. Write to the customer service department, vice president of marketing, and president or CEO. If the information was reported by a collection agency, send the agency a copy of your letter too.

By law, creditors cannot ignore information they know contradicts information in their file, and cannot report incorrect information when they learn that it is, in fact, incorrect.

If you feel a credit bureau is wrongfully including information in your report, or you want to explain a particular entry, you have the right to put a brief statement in your report. The credit bureau must give a copy of your statement -- or a summary -- to anyone who requests your report. Be clear and concise; use the fewest words possible.

How to Rebuild Your Credit

After you've cleaned up your credit report, you need to get positive payment information into your record. You'll need to get a credit card if you no longer have one. If your credit score is too low to qualify for a regular credit card, almost anyone can get a secured credit card by paying a deposit of a few hundred dollars. After you've paid on time for six months to a year, you'll be able to get a regular credit card.

It usually takes about two years to rebuild your credit so that you won't be turned down for a major credit card or loan. After around four years, you should be able to qualify for a mortgage. For more information on rebuilding your credit, see Rebuilding Credit: Don't Use a Credit Repair Clinic.

Don't abuse your new credit card. Be sure to pay off your purchases every month to avoid interest charges. Don't keep your credit card in your wallet if it's going to cause you problems again.

Copyright © 2004 Nolo

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