Cleaning Up Your Credit

A credit report is your of a personal financial report card! Your credit report lists each and every credit card, car loan, mortgage or other credit accounts you've ever opened in your entire life; the length of time each of your accounts have been open; what your past and current balances are; if you pay your bills on time; any bankruptcies, liens, or foreclosures... plus any and all late payments reported by your creditors - present or past. Negative reports are supposed to be dropped from your report after 7 years, but that is often not the case.

"Credit Scoring" is a system creditors use to help determine whether to give you credit, and how much to charge you for it. When you apply for a mortgage, lenders will request and receive credit reports and credit scores from all three bureaus (Equifax, Experian and Trans-Union). Credit scores range from 300 to 850, but the majority of scores fall between the 600s and 700s. A credit score above 700 will get you a very good mortgage rate. A score above 720 will get you an excellent rate. A score below 700 will make it difficult for you, and credit repair should be considered.

You can have negative misinformation corrected. You can negotiate with creditors to remove negative postings and try to lower your payments. You can raise your credit score higher so you can get the loan that you want at the low interest rate you deserve. However it will take perseverance, a positive attitude, knowledge and many hours of your time.

Here are some "simple" steps:

* Obtain copies of all your credit reports, from each of the big three credit reporting bureaus, Equifax, Experian and Trans-Union.

* Make sure you get your credit score, so that you can keep track of the improvement.

* Carefully review your report line by line for mistakes and outdated information. (70% of credit reports contain errors).

* Check for identity fraud, a growing problem in this country.

* Check for accounts you didn’t open, charges you haven’t made and delinquencies you didn’t cause.

* Send all your disputes with back-up documentation, via certified mail to all 3 credit agencies.

* Demand that each credit bureau send corrected copies of your report to all creditors who may have received the incorrect reports for the past six months.

* Negotiate with collection agencies to lower collection amounts and remove negative reporting.