7 Steps to clean up your credit report

Just as you regularly tidy and reorganize your closets and garage, you should make sure to clean up your credit report. Your credit history is the foundation to financial stability. The information in your credit report is what scoring companies such as FICO use to generate your credit score, which governs everything from how much you pay for a loan -- or if you can get a loan at all -- to your insurance rates.

Good news: You can get your credit report for free at www.creditKarma.com.

Paying attention to your credit report only when you're about to make a big purchase such as a house or a car can backfire. Credit reports can have errors that could affect your credit score.

Some issues take time to sort out and can create a headache if you're racing the clock to secure a loan. Go over your credit report now so you can catch and address any issues right away.

Where to find your credit report.

Federal law entitles you to a free copy of your credit report once every 12 months from the three major credit-reporting agencies: Equifax, Experian and TransUnion. You can get a free copy of all three bureaus' versions of your credit report at AnnualCreditReport.com.

To check your credit report every few months, order one at a time and space them out over the course of the year. If you're getting acquainted with your credit history for the first time, order all three at once.
If you're turned down for a job or credit, or you don't get the best rate available, you also have a legal right to see your credit report at no charge. The paperwork you get notifying you of the decision will include a number for you to call.

Start with your identification basics

The most important part of your credit report is your identifying information: your name, current address and Social Security number, says Bruce McInnis, CEO of the Credit Score Academy.com. "People obsess over tiny fluctuations in their credit score, but what they should focus on is the question, 'Is it accurate?'" he says.
Small discrepancies, such as an account that has your nickname listed instead of your given name, don't impact your score. But if there's a more serious discrepancy, such as an incorrect Social Security number, you'll want to get it straightened out, says Maxine Sweet, recently retired vice president of public education at Experian.

After checking all of the identifying information, look at the accounts and make sure they're all yours. Keep in mind that some lenders, such as the financing companies that issue many store-brand credit cards and companies that handle medical billing, might have a different name than the one on the storefront or hospital.
Scan your report for discrepancies

"Be alert for accounts that you don't recognize and check with the credit bureau to see what's going on," says Anthony Sprauve, former senior consumer credit specialist with FICO. "Verify that any negative information associated with any account belongs to you. It is possible that someone else's account is included in your report by mistake."

Sprauve says another red flag can be an account with a much higher balance than you carry. Since any of these items could indicate a case of mistaken identity or identity theft, these are issues to address right away.
Bruce McInnis (President & CEO of CSA), says one common -- and more benign -- credit report error he encounters is the inclusion of old negative information that should have come off the person's record. Most negative information stays on for seven years, and Chapter 7 bankruptcies remain for 10.

Watch out for phantom money

McInnis says consumers with a history of collections in their past can have their outstanding balances appear larger than they actually are because of the booming secondary market for collections. Here's how it happens: If a consumer has a credit card balance that becomes delinquent, the issuer will attempt to collect for a while, then give up and sell the account to a collection agency.

The card balance should then drop to zero, and a new account, this time with the collection agency, will appear on the report. Sometimes, though, the issuer won't strike that balance from their records, so it will appear as if the consumer has two outstanding debts. If the debt is bought and sold numerous times, which is common, the problem can multiply.

Another instance of phantom money can occur when a consumer has a closed bank account that has an overdraft protection line of credit tied to it. In some instances, that line of credit will remain on a person's report even after the account is shuttered, says McInnis.

How to dispute a mistake

If you find a major mistake, order your credit report from all three bureaus to determine whether the problem is limited to just one report. The next thing to determine is whether you need to take up your dispute with the credit-reporting bureau or the lender.

If there's a case of mistaken identity, such as someone else's information on your report, or accounts listed that aren't familiar to you, contact the bureau. All three bureaus have online dispute forms, HOWEVER, if you use the most effective method of resolution with the ProRemovalSystem…..you cannot dispute section 609, 610 or 611 of the FCRA (Fair Credit Reporting Act) online at all, the bureaus will not allow it.

In the case of negative information more than 7 years old or a report of an outstanding balance that has actually been paid off, CRA's free ProRemovalSystem can legally have them removed immediately!

Following up

It would be great if you could just file a dispute and forget about it, but you will have to follow up. Especially if an item is very old, the creditor in question may have been bought, merged or gone out of business entirely, which makes documenting everything important.

If you are working with a professional resolution specialist, they will automatically follow up every response with a re-investigation if the desired results have not been attained. The ProRemovalSystem database tracks this progress with you.

What not to sweat

There are a couple of items pertaining to your credit report that might seem alarming but really aren't a big deal. Closed accounts in good standing don't need to be taken off your report. In fact, leaving them on your report can help.

Credit inquiries also aren't as damaging as many people believe, says McInnis. "Honestly, a hard inquiry is very small impact on your credit score, and it's short term. It stays on for two years, but it has the most impact only within six months."

A hard inquiry will appear if you applied for a loan or credit card. It can also crop up if you enter into a service contract such as a cellphone or cable TV plan.

When all else fails

When all else fails, call the pros. TheCreditScoreAcademy.com is a Credit Education & Rehabilitation company. They will teach you step-by-step how to maximize your credit profile. It is not as easy as telling someone they need an account with a long history and perfect payment payment history to maximize their credit scores. It takes analyzing the report and getting SPECIFIC advice based on the individual situation. This is where CSA has an advantage. They have a customized Credit BluePrint Newsletter Series that does just this. 18 years and millions of disputed reports give them unparalleled expertise. It goes back to the story about changing your oil yourself when you have experts that do it every single day, quicker, cheaper and with a satisfaction guarantee, why waste your time when CSA researched and developed a program to do it with you.

You are not alone! END the stress!