Learn how to remove items from your credit report

Learn How to Remove Items From Your Credit Report

Have you taken the time to consider how your credit affects you today and in the future?

 

Credit is an essential part of most people’s lives. Your credit score is directly related to your credit history. It lets lenders know how trustworthy you are with borrowing money. This includes everything from a personal loan to a big financial commitment, like a home mortgage. 

 

Yet, in 2020, many people still have no idea how their credit score works, and the importance of ensuring the information on their credit report is accurate. 

 

Here are some tips that will help you take control of your credit score and credit report information. Whether you just graduated high school, have had credit problems in the past, or had a recent financial road bump, use this information to get your credit score healthy.

 

WHAT GOES INTO YOUR CREDIT REPORT

This is your first line of defense — knowledge! Knowing what information goes into your credit report can give you an idea of your financial health while also identifying if you’ve been the victim of identity theft. 

Each year, the three leading credit reporting agencies (Equifax, Experian, and TransUnion) allow you to obtain a free copy of your credit report. 

Due to the current COVID-19 pandemic, all three credit reporting agencies now offer free weekly online reports through April 2021.

Next, you have to determine what makes up your credit score and what factors can improve or negatively affect it. 

Finally, ask how you can improve your score. Usually, that information is provided to you as a list of risk factors when obtaining a copy of your credit report.

 

Rod Griffin, Senior Director of Public Education for Experian, said that the credit report lets you know which risk factors to work on to increase your credit score. 

 

THE FIVE CATEGORIES YOUR CREDIT SCORE IS COMPOSED OF

  • Payment history (35%)
  • Debt (30%)
  • Credit history length (15%)
  • Credit mix (10%)
  • New Credit (10%)

To achieve a high credit score (higher is better), you will need to:

  •  make payments on time
  • keep your credit usage below 30%
  • have a balance of different kinds of debt (credit cards, mortgages, personal loans, etc.)

If you can do this, you are on the right path to achieving a high credit score. 

 

One factor that can negatively affect your credit score, although not as much, is having a short credit history. For example, someone who makes payments on-time for an entire year may not have a high enough credit score to convince lenders for higher loan amounts.

Luckily, having a low credit score does not mean you will not be approved for a loan until it goes up. Some lenders provide information on the average score applicants need to qualify for a loan. It is recommended that you speak with your preferred lender, so you are clear on the terms and conditions to be approved for a loan.

Having negative impacts on your credit score can make most financial goals an uphill battle. Most negative impacts stay on your report for up to seven years, which can hurt your chances of obtaining new credit during that time.

NEGATIVE IMPACTS ON YOUR CREDIT SCORE

Here is a list of factors that can negatively impact your credit score and stay on your credit report for up to seven years in most cases. 

  • Late Payments or Non-Payment: One of the most critical factors of your credit score. Paying your debts late consistently can signal to lenders that you cannot afford or are unwilling to pay your debts. According to Equifax, if you are overdue on a payment by 30 days, your score can drop one point. 
  • Having a charge-off: When a creditor gives up on you paying your debt, they “charge off” your account, which can cause your credit score to drop by 100 points or more.
  • Bankruptcy: This should be considered one of your last options. Declaring bankruptcy can negatively affect your score by up to 200 points or more.
  • Foreclosure: Depending on your starting score, a foreclosure can cause up to a 100 point drop.
  • Repossessions: A car repo may cause your score to drop over 100 points. Additionally, a note about the repossession will stay in your report for up to seven years.
  • Judgments: This is when a court is involved to ensure debt repayment. The impact can vary, but scores can drop over 100 points.
  • Collections: This is when a creditor hires an outside firm to collect payment due on a debt. You will see this categorized as payment history; scores can drop over 100 points too.

IDENTITY THEFT

When someone steals and uses your personal information, your credit is at significant risk. Suppose your information is used to apply for new lines of credit and these accounts go into default. In that case, you are still responsible for them.

Thanks to the internet, finding people’s personal information doesn’t take that much effort. Here is a list of different ways your identity can be stolen.

  • Credit card theft
  • Credit card skimming
  • Browsing an unsecured website
  • Malicious software
  • Mail Theft
  • Phishing scams

If you suspect any information on your credit report looks suspicious, contact your creditors immediately to file a report. Having your identity stolen can result in financial loss, credit damage, and loss of peace of mind. Depending on the severity of your stolen personal information, it can take years to resolve. 

This is why it is utterly vital to report anything that looks suspicious when looking over your report.  

Although the risk of identity theft cannot be entirely eliminated, there are some measures you can take. 

  • Monitor your credit report 
  • Report suspicious information
  • Freezing or locking your account temporarily
  • Contact law enforcement and file an identity theft report
  • Set up a fraud alert 

REMOVING NEGATIVE ITEMS FROM YOUR CREDIT REPORT

Getting an item removed from your report is not easy, and there are usually several steps to take to do so.

  • Dispute the information with the credit bureau 
  • Initiate a dispute directly with the reporting business
  • Hire a professional credit repair service
  • Get credit counseling
  • Pay for delete
  • Write a goodwill letter
  • Wait it out

CREDIT REPAIR STRATEGIES THAT DON’T WORK

  • Filing for bankruptcy: Even though you eliminate your debt when filing for bankruptcy, your credit score will be severely damaged. Additionally, the note of your bankruptcy will stay on your credit report for seven to ten years.
  • Closing a credit line that is behind on payments: This affects your credit to debt ratio and does not really remove the debt owed, which negatively impacts your credit score calculation.

 

Living day to day on credit is not a financially sound practice, but credit has its place in your financial life. It will help you pay for high dollar items such as higher education, a car, a home, or in some cases, for emergencies.   

My recommendation is that you have at least an annual financial health checkup. By keeping your credit in check and having a great credit score, you will be able to meet your financial goals much faster. 

Now, keep in mind that making all the right moves today won’t necessarily mean your score will improve overnight. However, having a plan and checking your credit report often is the best defense you have for protecting your credit.

Are you a business owner seeking to eliminate debt from your company? Schedule your discovery call today to see how we empower entrepreneurs to make, manage, and keep more of their money. 

Best,

Linda

Source: How to Get Items Removed From Your Credit Report  by Money

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