Keep the Good, Fix the Bad
After you read and understand what’s on your credit report, your next steps
are to build on the existing good information and to minimize or eliminate the
negative.
Fix all errors and omissions
You have the right to dispute the accuracy or completeness of any item
in your report. The credit reporting companies are required to update the
status, or delete unverifiable information, within 30 days of receiving your
request. Use the Request for Reinvestigation form that’s provided with your
credit report. If not provided, you may obtain one from the agency’s Web
site. Using these forms speeds up the process. Enclose copies of documents
that support your claim.
When sending supporting evidence with your Request for Reinvestigation
form, never send the original documents, and always track your submissions
by using certified mail with return receipt requested or a similar service.
If you don’t receive a satisfactory or timely response, contact the creditor
directly and demand that your claim be investigated, copying the credit
reporting agency. Here’s the contact information for the three main credit
reporting agencies:
Equifax
Phone 800-685-1111
Web site www·equifax·com
Experian
Phone 888-397-3742
Web site www·experian·com
TransUnion
Phone 877-322-8228
Web site www·transunion·com
You may also want to contact the Federal Trade Commission (FTC) if you’re
still not satisfied, so make sure to keep copies of all correspondence to and
from the credit reporting companies and creditors. You may file a complaint
against a credit agency directly with the FTC online at www·ftc·gov/ftc/
bcppriv·htm — or call the FTC at 877-382-4357.
Avoid credit repair clinics. At best, they don’t do anything you can’t do yourself.
At worst, these firms charge outrageous fees and suggest potentially illegal
practices.
You’re allowed a brief statement (100 words or less) explaining any disputed
information in your report, but your statement can’t just explain factually
correct but negative information; you can use this statement only to dispute
errors. However, statements to the credit reporting companies are rarely
effective. It’s usually best to explain negative information directly to a potential
creditor.
Add good information to your report
Yes, you can request that each of the three agencies add information to your
file. Although they’re not required to do so, they often do if the info can be
verified. Focus on missing positive account histories, even if the account is
closed. Also add information that explains or corrects potentially negative
information.
Creditors care most about demonstrated payment responsibility. Account
diversity also matters, as does the extent of historical credit, so an old credit
card payment history is well worth the effort to add to your report.
Add missing information
Often, you find an account’s positive credit history missing on only one or
two of the three credit reporting companies. Send a copy of the correct report
from the agency with the complete information to the agencies missing it.
Include a brief cover letter explaining your request. Copies of monthly statements
from the missing creditor make it more likely the information will be
added.
Missing or incomplete information on current and prior employers or residences
can make it difficult for potential creditors to verify information or
obtain a sufficient profile to make a favorable determination. This is particularly
important if the job or address change has happened in the last two to
three years.
Don’t assume the information you’ve corrected or added will be permanently
changed on your report. Sometimes your corrections inadvertently disappear.
Review your report at least annually and more frequently if you know
you’ll be applying for a large amount of credit sooner than that.
Keep a good mix of accounts
Don’t close all your old accounts. A variety of accounts over a long period
of time and with proven patterns of borrowing and full repayment creates a
favorable credit profile. Closing unused credit accounts decreases your utilization:
your ratio of total debt outstanding to available debt. Potential creditors
like to see low utilization.
Opening a bunch of new accounts solely to improve this ratio, however, is
also a bad idea. The mix of newer and older accounts helps determine your
overall creditworthiness. A number of new accounts opened over a short
period of time negatively impacts your file.
