We all make mistakes, and often times, those mistakes can be reflected in our credit score. While there’s no way to completely erase your credit history and start over (wouldn’t that be nice), there are a few ways to clean up your credit. Here are just a few useful tips to help you get a new start on your credit!
- First off, you need to make sure your credit score accurately represents your use of credit. Believe it or not, it’s very possible for your credit score to have some negative data that simply isn’t true. Now, this isn’t because someone’s out to get you, but credit record keepers are humans. Yes, they sometimes make mistakes in the data that’s inputted into your credit score. So, if your score is lower than what you’d like, go through and check all the records. A recent study actually showed that one in five credit reports have material errors in them. That means it’s very possible that your bad credit isn’t your fault but simply a recording error!
- It’s really easy to approach your credit score and get lost in all the legal jargon and details that seems to surround it. However, there are a few laws that are important to understand when it comes to improving your credit score. You don’t need to be an attorney to understand these laws, either; they’re pretty straightforward. The Fair Credit Reporting Act requires that the credit bureaus to provide a free credit report to you each year if you ask for it. You shouldn’t have to pay any fees or charges just to know what your credit score is. The Fair Credit Billing Act means that—if any company or vendor charges you for something you didn’t buy, the incorrect amount, or some other unfair bill—you can both contest those charges and demand that they take charge in getting it cleared off your credit score.
- In order for negative information to be applied to your credit score, the company that reported it must have evidence to back that data. So, if you think the company incorrectly charged you or is lowering your credit score without sufficient evidence, then you can fight it. They have the burden of evidence and, if it can’t be produced, then you have the legal right to demand they remove the negative information. This can be especially effective if there was something in the distant past that is lowering your credit score. Because companies go out of business, merge, lose data, etc. over time, it will be harder for them to provide evidence of your bad credit. So, if you feel like some dark splotch has been on your credit report for too long, then go ahead and challenge it. The company is legally obligated to show evidence, which may not even exist!
- Another aspect of negative information on your credit score is that is has to be complete. These simply means that it has to accurately represent the whole situation, not just the bad part. For example, if you were billed something twice, but already paid it once, and the company reports the missed second payment as a negative, then that’s simply not fair. While just seeing that you missed a payment may look back, when the full picture is taken into account it’s obvious that it’s not your fault. There are actually lots of situations like this that get put onto credit reports and unfairly lower your credit score.
- You should also be aware that, for most negative data on your credit score, it can only be on your report for seven years. However, credit bureaus are notorious for not removing those spots from your score when they should be. So, go through your credit score and make sure it’s up to date. However, remember that bankruptcies stay on for 10 years and any unpaid judgments last 7 years or until the statute of limitations expires—whichever comes last.
- If you’ve looked over your credit report and think that there is information that is either inaccurate or should be removed, then make sure you have the sufficient documents to prove it. While the burden of evidence is heavier on the vendor or company to prove that the data is correct, you still need to have at least a small paper trail to speed up the process. Bills, credit reports, bank statements, etc. can all help you prove you point and get your credit score back up. Send the information to both the creditor that’s reported your bad credit and the credit bureau. Hopefully it will stick with at least one of them. Many credit experts suggest that you do this whole process via snail mail because it guarantees your right to see the vendor’s evidence that backs up the negative data. If you contest the information over the phone or on the Internet, then you may lose some of those rights.
- While all of this advice is great for improving your credit score after it’s been dealt a bad blow, I always like to say that it’s better to be prevent something bad from happening than having to fix it later. So, instead of letting your credit score fall low, stay on top of it so it never gets low! You can do this by periodically ordering your credit score and analyzing it, or enrolling in a free monitoring service that gives you monthly updates. Program like Credit Karma not only give you access to your credit score, but they also update you when changes occur to your score or other important things happen.