Fixing Credit Report
Imroving an individual's credit rating typically is a gradual process, but there are situations in which a drastic increase in credit score is possible and it can occur relatively quickly. Although a credit bureau's main purpose is to report pertinent information, many errors can be found on credit reports and the result can be a negative impact to the consumer. It is important to note that the various credit reporting agencies gather information from multiple sources, but primarily from data that is provided to lenders by the individual. The most common errors usually are found in the address and employment fields, but these typically carry no weight in the credit scoring system. The more critical errors are the ones that deal with payment history, account status, and the presence of collections and judgments. A wise consumer monitors their credit report for inaccurate information, and takes the necessary steps to fix it as necessary.
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The first step is to review a copy of the actual credit report. Pay close attention to each account that is listed as open, and make sure that all the information is correct. Check the balances on each credit card, but keep in mind that it typically is about a month or more behind depending on the reporting practices of the company. While looking at the revolving accounts (credit cards), also check the credit limits to ensure that they are up to date. Few people realize that small errors involving credit limits can actually impact their credit score. For example, a $5000 balance on a credit card could appear to be maxed out or over the limit if the credit report reflected a lower amount than the right one. A $10,000 credit limit would mean that this card is only 50% used, whereas a $5,000 credit limit would mean that the card was at or dangerously near its limit.
If any collections appear on the credit report, every step possible should be taken to confirm that they are indeed supposed to be on there. Collections and judgments are only allowed to be reported for a duration of 5-7 years, so if any are older they should be removed. Any judgments should be verified as well.
All the payment history information should be correct, as this is a major component of the credit scoring system. If there are any missed payments, some lenders will quit reporting them if sufficient time has passed and the recent pay history has improved. Make a list of each creditor that is reporting a negative pay history, and call each one and request that they stop reporting old data. Many payments will be reported for 24 months, but it can be longer or shorter depending on both the bureau and the company.
Any errors that are found anywhere on the credit report require action, and the easiest way is to contact the credit bureaus directly. A dispute can be filed online, by mail, or even right over the telephone. Taking the time to fix your credit report is definitely a good use of time and can impact insurance rates, job opportunities, and even the ability to secure a loan.
