When my husband and I married our credit situation was not good. I had absolutely no credit and still don’t. My husband had very poor credit with outstanding debts. For years we wallowed in the fact that we couldn’t buy a home or move forward with many of our dreams as a new couple. It wasn’t until the past year that we have gotten serious about cleaning up my husband’s credit and building good credit for the both of us. We have set several short term goals to accomplish in order to fulfill our long term goals. After much research and learning through experience I have found that cleaning up your credit and have a better credit score comes in many different steps for many different people. I am hoping to outline the basics here of cleaning up your credit report and making your report and score look better to lenders. I hope to address the issue of getting out of credit card debt and other types of debt later.
Clean up your Credit Report
Your first step in cleaning up your credit report is to obtain a copy of your credit report from all 3 major credit bureaus (contact information at the bottom of this post). You are entitled to 1 free credit report from each bureau every 12 months. Once you receive each credit report, take the time to sit down and go over every negative item on your report. If there are any errors on your report (such as late payments when you weren’t late), write a letter to the CRA (Credit Reporting Agency) in question and ask that the error(s) be removed. The CRA has 30 days to investigate; they’ll write to the creditor and ask them to verify the payment info. If they don’t, the CRA will remove the negative info from your file. You may also dispute an item if the debt is older than 7 years (10 years for bankruptcy).
Your next step in cleaning up your credit report is to pay all of your delinquent debts. It will not remove them completely from your report, but a late payment is not nearly as bad as an unpaid debt. This step can be long and tedious. In our case, I found that some of my husbands unpaid debts had been sold to so many collection agencies that we couldn’t even find out who to pay the debt to. In this case I went ahead and disputed the item on his credit report. We’ll see what happens.
Establish Good Credit
If you don’t have a credit card, get one. It will help you build credit. Just use it to buy your groceries, and pay it off in full every month. The best option for those with bad credit I have found to be a Secured Credit Card. If your bank says you don’t qualify for a credit card, then ask for a secured credit card. This means you put money into an account (often a savings account) and you can charge no more than the amount in the account. It sounds like a Visa check card on a checking account, but the difference is that this is a “real” credit card and shows up on credit reports to help you build credit. (Some secured cards don’t help you build credit, so make sure you ask your banker if their secured card will.) There are many scams online offering secured credit cards. These often have astronomical fees and charges. Your best bet is to inquire at your local bank or another major bank chain. Bank of America, Wells Fargo, and other major bank chains (as well as local bank chains) often have excellent options for a secured credit card. If you don’t mind having a credit card through a different bank, shop around. You may be able to find the same kind of card with a lower interest rate and lower annual fee elsewhere.
For more information on establishing, rebuilding, and improving credit visit these links:
Building a Better Credit Report
3 Major Credit Bureaus
Equifax: 1-800-685-1111 (general) or 1-800-525-6285 (fraud); PO Box 740241, Atlanta, GA 30374; www.equifax.com
Experian: 1-888-397-3742 (general and fraud); PO Box 2002, Allen TX 75013, www.experian.com
TransUnion: 1-800-888-4213 (general) or 1-800-680-7289 (fraud); PO Box 2000, Chester, PA 19022; www.transunion.com
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