Poor Credit

How To Clean Up A Poor Credit History

If you want to pay off your debt, save and invest, then you first need to clean up your poor credit history. You need to note that cleaning up a poor credit report is not something that can happen overnight.

However, it’s an important step when it comes to building wealth. A poor credit rating can deny you various opportunities in employment and rental properties.

Also, you might be forced to pay higher auto insurance premiums if you have a poor credit rating. So, how can you clean up a poor credit score? Here are some tips.

Retrieve Your Credit Report

It’s almost impossible to address a problem if you don’t know the causes. The same case applies to your credit history. You will need your report to know what you are dealing with.

It’s your right to get a free copy of your credit report every year. However, this free copy doesn’t come with the FICO number. However, you can request this number for an additional fee.

Once you obtain a copy of your credit report, you will see all the areas that you need to address as well as the steps you should take.

Analyze The Report Carefully

Go through all the reported items on the report to verify accuracy. These reports contain errors sometimes, such as misreporting. Also, you might find another person’s credit balances added to your report erroneously.

Other common errors include bills reported as paid late when you had paid them on time. All these errors can be costly and taint your credit score. Therefore, go through the report and analyze all the items listed there to ensure the information is correct and the items belong to you.

Dispute Errors Immediately

If you find a significant error on your credit report, then you should contact the lender or the creditor immediately. On the other hand, if you cannot trace the actual mistake but the report has some discrepancies, then you should talk to the credit-reporting bureau.

Addressing the matter with the credit-reporting bureau is easier compared to the individual entities since they have all the information from all your lenders. In case you find that your identity has been stolen and used to secure loans, then you should report to your local police department immediately.

The authorities together with a reliable fraud resolution company should be in a position to stop such issues. Ensure that you follow up when you file these disputes. If you don’t, the issue might escalate, making it harder to address in the future.

Start Building Your Credit

Now that you have gone through your report, identified the people you owe money to and addressed any discrepancies, then it’s time to start building your credit. This process might be slow.

However, if you want to use the right channels, then you must be ready to observe patience. When building credit, it’s advisable to avoid borrowing as much as you can. In fact, borrowing is counterproductive since you might end up with the same problems again.

Final Thoughts On How To Clean Up A Poor Credit History

Cleaning up a poor credit history calls for a thoughtful and careful process. However, if you follow the above steps you will realize it’s not as hard as it seems. Most importantly, avoid digging yourself into debt problems once you have cleared your poor credit history.