Ultimately this question somewhat depends on the nature of your credit problems. The best way to fix credit differs depending on what the primary problems are. However, for most people, the best way to fix your credit problems is to simply have bad information removed from their credit reports.
All of the Big Three credit reporting agencies – Equifax, Experian, and TransUnion – maintain separate databases and receive their credit reporting information from different sources. Further, most of this information is manually added to the database. This means that there is a lot of room for error and unless you closely follow your credit reports, these errors can add up quickly.
By law, all U.S. citizens and residents are entitled to receive free copies of each of their Big Three credit reports once a year. Often these come bundled as a “Three-in-One” credit report, but sometimes these bundled packages do not provide all of the relevant information. You can receive full copies of your credit report online from annualcreditreport.com or you can call each of the credit reporting agencies to receive copies.
Once you receive the credit reports you will probably notice differences in the entries between the three and this indicates that there are probably at least some problems. At this point you basically want to methodically go over each entry and there are three basic things that you are looking for:
a) Items that should not be on your credit report at all. These may involve companies that you have never dealt with or expenses that you were never billed for. Problems in this respect are common for people with common names and for people that have received a lot of medical bills. In the former case, it is very easy to get the reporting for two separate people named “John Smith” confused. In the latter case, the decentralized billing systems of many hospitals means that you may have medical debts listed that you never knew were actually owed. Getting these removed is on of the first steps to fixing credit.
b) Items that should have already been removed from your credit report. Most items reported should be removed from your report after seven years, though there are some exceptions, such as bankruptcies. Despite this, many old items remain on your credit report much longer than they should until you actively raise the issue. Many people that do not regularly check their credit reports are amazed at the amount of very old information is on there.
c) Items that have incorrect details. One additional zero added to a credit card account can seriously impact your credit score, so too can a paid off debt that is still listed as unpaid. To fix bad credit is important to make sure that the items listed on your report are accurate.
Once you identify all of the problems – and keep in mind they may be different problems on each report – you can then contest the inclusion of these items. Each of the Big Three credit reporting agencies provide options on their websites to contest items or you can do it manually through the mail. Be sure that you have documentation backing your contention as this will weigh heavily in your favor. By law the credit reporting agencies have to investigate any contested item and if you are found to be correct these items will be removed from your credit report. This is probably the easiest way to fix credit scores for most people.
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