Having a good credit report is an essential aspect to have financial freedom. Lenders will look at your credit report to determine how reliable you will be in paying back money lent to you. It also can affect interest rates and credit limits. Potential employers, landlords and the like also may check your credit report. Knowing how to fix your credit report can provide you with further financial capabilities in the future and allow you to control how your money is used.
Step 1
Obtain a copy of your credit report. Federal law states you have the right to a copy of your credit report from each of the three main agencies every year, so don't pay unless you have to.
Step 2
Read over your credit report to ensure the information contained therein is accurate. Sometimes creditors make false reports to credit reporting agencies that can negatively impact your score. Also, look for what other factors might be causing your credit score to be lower than what you'd like.
Step 3
Address any false information that might be contained in your credit report. To do this, send a letter to the credit bureau informing it of the false information and provide proof to back up your claim. Common false information that is worth disputing includes negative items that are older than seven years old that shouldn't be listed any longer (such as bankruptcy), accounts listed with an incorrect status or inaccurate credit limits on accounts.
Step 4
Pay any due payments by the due date. Delinquent payments or accounts that are sent to collections can have a significant negative impact on your credit report and score. Consider having payments withdrawn automatically from your bank account, but be sure you have sufficient funds to avoid further problems.
Step 5
Keep the balances on your credit cards or lines of credit low. Having balances that are near your credit limit reflects poorly on your credit score. This can suggest to lenders you are reaching an inability to pay. If you have balances that are near their limit, start by paying them down first. Pay off revolving balances such as credit cards before installment loans such as auto loans.
Step 6
Pay down or pay off balances in lieu of transferring them to a different credit account. This could hurt you in two ways: your balance remains the same, and you could get punished for opening a new account.
Step 7
Do not apply for any new cards or loans unless necessary. These types of inquiries into your credit history can have a negative impact on your score, so it is best to avoid these when trying to improve your score. Along the same lines, do not close any accounts that have a long history. A lengthy and successful relationship with a creditor reflects well on a score, and closing an old account, even if you never use it, can actually lower your score.
Tips and Warnings
- Talk to a professional about your personal credit score to determine what is the best way for you to improve.
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