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Is It Time to Bite the Bullet and Clean Up Your Credit Rating?

Few people have a completely unblemished credit rating, but if you’ve recently found yourself being rejected for finance on multiple fronts, it could be a sign that your creditworthiness problem might be serious. If you have a real need for credit but are having difficulty obtaining it, it’s probably time to bite the bullet and see exactly how bad your rating is.

It may not be pleasant to see your financial situation laid out in black and white, but the problem won’t go away by itself, and you need to be proactive if you want to return to a better credit standing. Here’s what to do to ensure your credit rating is as clean as possible.

1) Access Your Credit File
Everyone has the right to see a copy of the information held on their credit file. The companies who compile these records are called credit reference agencies, and the main ones in the US are Experian, Equifax, and TransUnion. A quick search online will bring up details of how to obtain copies of the data they hold on you, and it’s worth obtaining the files from all three companies, as the information on each of them may be different.

2) Check for Errors
Once you have your files, check that all the information held on them is correct and that there are no obvious mistakes. Some possible errors include:

  • Duplicate entries, where the same item of information is included more than once.
  • Accounts listed as still being open, even though you’ve closed them.
  • Debts which you’ve cleared, but are marked as unpaid.
  • Incorrect balances shown for credit cards and similar accounts.
  • Flat-out mistakes, such as information about another person being included on your file (aka ‘mixed file’), usually because of similar names and/or addresses.

If you spot any of the above or anything else which seems wrong, you have the legal right to have the error corrected. Instructions on how to raise a query with the credit reference agency will have been included in the documentation sent with your file.


3) Check for Unknown Activity
Identity theft is still a major problem, despite the many millions of dollars the finance industry has spent to reduce its impact. If you don’t recognize an entry on your file, such as a credit card application you don’t remember making, it’s important to query this as soon as possible. If someone else has been using your details to apply for credit, the consequences can be quite serious indeed.


4) Clear Up Minor Problems
If you’ve overlooked a minor debt in the past, such as an invoice for a catalog purchase, then it’s possible that this default was listed in your file without your knowledge. Many companies don’t pursue small debts if it’s not economical to do so, and simply write the money off while still reporting the default to the credit agencies. If you see any such debts, pay them off if you can, and ask that the creditor informs the reference agencies so that your files can be updated.


5) Monitor Your Files
Once you’ve cleared your files of all errors and omissions, it’s important to keep an eye on them in case any more incorrect information is added in the future. You can do this either by making a note to yourself to request a new copy of your files every year or by signing up to one of the many monitoring services which will inform you every time a new file entry is added. By doing this, you can clear up any undesirable information as soon as possible before it causes too much damage.

If you have bad credit, confronting the situation is not an easy step to take. While there’s no magic solution that will clear your rating instantly, making sure that your credit file is correct and up to date is the vital first step toward getting your creditworthiness back on track.

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