Bad credit reports do not disappear by paying a company to remove negative information. If an outright error is found on your credit report, it is imperative that the error be fixed; not simply removed.
Mark your calendar and obtain your free copy of your credit report once a year by going to www.annualcreditreport.com every 12 months.
Here are some key areas of your credit report to look through for any possible errors:
Late payments. Approximately 35% of your score is based on late payment reporting. There should be no late payments which are over 7 years old on your report.
Collections. It is a good idea to retain copies of your credit report for at least 7 years. There should be no reports of collections or charge-offs on your report that are over 7 years old.
Payment records. Sometimes collections are not properly updated when they have been paid in full or settled. All paid-in-full installment loans as well as any collections that have been paid off should show a zero balance.
Mysterious accounts. You should be able to recognize and properly identify all accounts listed on your report. Sometimes incorrect accounts do appear. These can be due to identity theft or by mistaken identity. If this occurs, contact the creditor immediately to compare name and social security number information. If the account is indeed fraudulent, you may request what is called a "validation of debt" or "media packet" which provides details on the account holder. In cases of identity theft, request a fraud affidavit from the creditor and consider filing a police report as well.
Original dates. 15% of your credit score is based on the length of your credit history. Check the opening dates of all your accounts and make sure these are correct. Keep in mind, original account opening dates could be reported inaccurately if of Credit Card Company is purchased or merges with another, or if a credit card is report stolen or lost.
Available credit. The amount of your debt makes up 30% of your total score. Make sure that these limits match with what is printed on your monthly statement. It is wise to keep your balances below 50% of your available credit limit. Less than 30% is even more advantageous.
Types of accounts. In some cases, accounts are not properly categorized. For example, a home-equity line of credit should be categorized as a second mortgage on your home, not a line of credit. Contact the creditor immediately if an error is discovered.
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