5 Steps You Should Consider to Help You Clean Up Your Credit Report

Throughout your life, you will need to get lines of credit to make larger purchases. Most people don’t have the cash on hand to pay for things like a car or home. When the time comes to make a big purchase, you will need to seek out the assistance of a reputable lender. Applying for a loan can be a very time-consuming process.

One of the first things a lender will do is review your credit report. Nearly 16% of all Americans have very poor credit. Having poor credit will make getting approved for a loan nearly impossible. If you are tired of being denied loans and credit cards, then now is the time to clean up your credit report. Here are some steps you can take to improve your credit report.

1. Identify the Cause of Your Low Credit Score

When trying to develop a plan on how to clean up your credit report, you need to review it to identify factors that are negatively impacting your score. If you are unfamiliar with how credit scores are calculated, you are probably unsure about the factors that can lower this important credit metric. Some of the most common factors that can negatively impact your credit score are:

  •       Too many credit inquiries
  •       High debt-to-income ratio
  •       Short credit history
  •       Late payments

If you want a quick way to improve your credit score, then you need to work on getting credit inquiries removed from your credit report. With some online research, you can identify how to remove inquiries from credit report and improve your overall credit score.

2. Challenge Errors On Your Credit Report

Going through your credit report line by line can be time-consuming. However, this is the only way to get a real glimpse at what you’re up against. As you look at your credit report, you need to make sure all of the information it contains is accurate. Some creditors will make mistakes when it comes to reporting the amount of money they are owed.

In some cases, you might have multiple errors on your credit report. These errors can paint an incorrect picture of your current financial situation. As soon as you find errors on your credit report, you need to work on removing them. Disputing these errors with the three major credit reporting agencies can help you get them removed. Once they are removed, you will probably notice a boost in your credit score.

3. Work on Paying Off Debt

If all of your credit cards have high balances, your credit score will suffer. The higher your credit utilization ratio is, the lower your credit score will be. This is why you have to work on getting your balances paid off. Once you get your credit card balances near zero, you should request a credit line increase.

By doing this, you can show that you are using far less credit than you currently have. Once the major credit reporting agencies see this, your credit score will start to rise. The last thing you need to do is close credit cards once you get them paid off. As long as you don’t have to pay annual fees, you should keep all credit cards to keep your utilization ratio low.

4. Get Collection Accounts Off Your Credit Report

Some companies will sell the outstanding debt you have to a debt collection agency. When this happens, the debt collection agency will report these balances. If you have one or more collection accounts on your credit report, your main goal should be to remove them.

Calling a debt collection company and asking for a lower settlement is a great way to do this. In most cases, these companies will settle your outstanding balance for pennies on the dollar.

5. Check Your Credit Report Regularly

If you are successful in your attempt to improve your credit report, then you need to work on retaining your good credit score. Achieving this will require you to check your credit report on a regular basis. Should you ever have any issues, you can always contact a lawyer, such as this credit report lawyer in Denver, for assistance. The time and effort invested in checking your credit report will definitely pay off.

By using the great tips in this article, you can improve your credit score in no time.