Get Your Free Credit Report

Reviewing your credit report for errors is a step you can't overlook when rebuilding credit.

You are entitled to a free credit report and that's very important.  Your FICO score is the basic report that most lenders and credit cards use to determine your credit worthiness.  FICO gets its' base information from your credit reports so it is very important that these reports reflect you in the best way possible. 

Credit reports are compiled, maintained and sold by three major for profit organizations, Equifax, Transunion and Experian.  Your first step in cleaning up your credit is to get a copy of your report from each organization.  You can do this once a year at no cost by applying at www.annualcreditreport.com   or by calling 877-322-8228.  If you have already received copies this year, you can get a second copy free if:

• You've been denied credit because of information in your credit report.  
• You're unemployed and looking for work.  
• You receive public assistance.  
• You believe your file contains errors due to fraud or identity theft.  
• You've been denied employment (or another adverse employment decision has been made) based at least in part on information contained in a credit report 

When you request your credit report, be prepared to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. 

Identity fraud is obviously a big deal with these companies so you may also be required to provide information that only you would know to confirm your identity. There may be questions about previous addresses or the amount of your monthly mortgage payment or a former employer. 

After you get your credit report, read through it carefully and look for items that are incorrect or out of date. 

Out-of-Date Information 

Make a list of everything that's out of date. Here are some examples of “old” information that should not appear in your report: 

• negative information that's more than seven years old, including lawsuits, judgments, paid tax liens, accounts sent to collection, criminal records (except criminal convictions, which may be reported indefinitely), late payments, and overdue child support  
• bankruptcies reported more than ten years after 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), and  
• credit inquiries (requests by companies for a copy of your report) that are more than two years old.  

Inaccurate Information

Next, look for incorrect information, such as: 

• incorrect or incomplete name, address, phone number, birth date, 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  
• any account you closed that doesn't say "closed by consumer."  

Request Removal of Negative Items

Now comes the fun part.  After reviewing your report, complete the form the credit bureau provided to dispute entries in your report and list 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, 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. 

If the Credit Bureau Disagrees 

If the credit bureau responds that the information is correct, contact the bureau directly to discuss the problem.  Or, skip that step and go directly to the creditor. 

Ask the creditor to 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. 

Not comfortable writing letters?  If they aren't in the right format they could do more harm than good.  There is a great source of professionally written letters for both credit bureaus and credit card companies. 

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. 

You don't necessary have to have a bad credit to fix to fix a credit report.  Look at it often and carefully consider the validity on each item. If you are considering a car loan or looking at mortgages, examine your report at least 4 months before you apply and fix whatever you can.  This exercise will likely save you a ton in money by being offered a better interest rate than if you had done nothing.

In summary, correcting errors is a fairly straight forward process if the credit bureau agrees with you. If however they do not, it’s going to take persistence on your part to get it rectified. Time spent cleaning up a report is an investment in your credit future. 

Go here for a more detailed step by step guide in disputing negative items on your report.