Credit is your reputation as a borrower. Before offering you a loan, lenders use your credit score to determine the amount of loan you can be offered, the term of the loan and also the rate of interest. You can raise the score by cleaning your credit report.
What is a credit report?
A credit report is a record of your borrowing and repaying activities including information on late payments, tax liens and bankruptcy. It also includes your identifying information and bank account details, and reflects your ability to repay a loan. A credit score is a computer generated number based on statistical analysis of your report. The score is relative and is accessed by your lenders to determine the risk they take by lending you money.
How can you clean your report?
You can fix your credit all by yourself or with the help of counseling agencies. The following guidelines can assist you to clean your report and improve your score:
1. Order a copy of your report: Under the Fair Credit Reporting Act, you have the right to order a free copy of your report from the consumer reporting agencies (Experian, Equifax and Trans Union).
2. Scrutinize your report: You should analyze your report for incomplete/incorrect listings as these affect your score.
3. Dispute wrong listings: Next, you should dispute any inaccurate/incomplete items by substantiating your claims with relevant documents. The consumer reporting agency must investigate within a month the listings you disputed and provide you a free copy of report if the items you disputed results in change.
Once the inaccurate/incomplete listings are rectified, you must start saving money each month to pay towards your past due accounts. You must also try to get yourself a new credit card and open new bank accounts to further improve your score and restore your credit.
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