Incorrect details within your credit history can badly affect your score.
As a consequence, your options when getting new credit applications may become limited and you might not be able to entitle to the best interest rates. Keep on your mind that creditors reserve their best deals for customers that have good to excellent credit. If you have very poor rating, the interest rate to your loans and credit cards can be much higher.
The start of the entire year is a great time to start rebuilding credit. How can you correct errors in your credit history? Consider these tips:
1. Request for your annual free report.
All consumers are entitled to receive one copy of credit report for free from each of the three major credit bureaus (Experian, Equifax, TransUnion). The three bureaus have set up an official website, annualcreditreport.com, where consumers can request for their free annual credit report. Take note that this is the only online resource authorized by the government to distribute free consumer credit reports.
2. Fix errors in your report.
Check your credit report and see if there are errors or incorrect charges in your file. If you notice any error, you can send a letter of dispute to the bureau that issued your report via registered post mail. Other items which can be corrected are negative information or details such as a record of bankruptcy, foreclosure or tax liens which are older than 7 years. These remarks are derogatory and can badly affect your credit score.
3. Enclose copies that support your claim.
In your letter, it helps to enclose copies of documents that support your claim such as receipts or written correspondences from your creditor. You can also send a photocopy of your credit report, with the incorrect items clearly marked or encircled.
4. Wait for the bureau’s response.
Upon receiving your letter, the credit bureau will conduct its own investigation on the matter which can last up to 30 days. This is why consumers are advised to check their credit reports at least a month in advance before submitting credit application. If your dispute is valid, the bureau will send an updated copy of your credit report for free and will notify the two other bureaus about the corrections made. This step alone can boost your credit score by a few points.
5. Alert the credit bureau.
If you think you have been a victim of identity theft, you should place your credit report on alert or on credit freeze. Next, file a complaint with the FTC (Federal Trade Commission).
6. Monitor your credit report.
Order a copy of your credit report after six months to make sure that all the information are accurate. If it will be your second time for this year to request for your report, you can order directly from any of the three major credit bureaus for a small fee of $9 to $12.