Cleaning up your credit can help you prove eligible for lower interest rates, as well as gain approval on additional lines of credit and loans. You should make it a routine to check your credit and work on any problem areas that could be adversely affecting your credit score. By working towards eliminating debt as part of clearing up your credit, you can prevent bankruptcy and potentially ruining your credit for a significant period of time.
Step 1
Request a free copy of your credit report. Every twelve months, you are eligible to receive a free copy of your credit report from the three major credit reporting agencies Equifax, Experian, and TransUnion. Go to the FTC approved site, Annual Credit Report to request your copy.
Step 2
Review the history found in your credit report. Any discrepancies should be reported immediately to the credit reporting agency. Getting rid of false information on your credit report can be a step towards clearing up your credit.
Step 3
Determine how much debt you are in. Calculate the payoff amounts from your credit report to understand how much money you owe. Use this sum to figure out how much money each month you will have to pay in order to eliminate this debt.
Step 4
Work towards paying off revolving credit lines first. To clear up your credit, you should focus on paying off revolving accounts more so than fixed loans. Credit agencies put more weight on these accounts when calculating your credit score.
Step 5
Make increased payments on cards with higher interest rates. To save money and clear up your credit quickly, make the largest payments on credit cards that you are paying the most interest on.
Step 6
Keep an older credit line open. Closing an older credit account will not necessarily help clear up your credit. Charge a small amount on an older card and pay off the debt as soon as the bill comes.
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