Correcting mistakes on your credit report

If you find inaccuracies in your report, you'll want to be sure they are corrected. You can usually find instructions for disputing those mistakes on the last page of the report. And be sure to watch out for credit repair agencies. There are no legitimate credit repair agencies. Some charge hundreds or thousands of dollars when they can't legally "fix" credit.

Accurate negative information can be reported for seven years, but there are some exceptions:

· Bankruptcy information can be reported for 10 years

· Information based on an application for a job with salary of more than $20,000 has no time limitation.

· Information concerning a lawsuit or judgment can be reported for 7 years or until the statute of limitations runs out.

Follow these 5 simple steps to correct your credit report:

1. Order your credit report

Find out what the top 3 credit bureaus are saying about you! It is likely that they may all be different. Creditors may not report to all 3 bureaus. You can order a report for a small fee. If you've been denied credit, insurance or employment because of your credit report you are entitled to a free report. You have 60 days after receiving your denial to request your copy.

2. Examine your reports carefully.

Credit bureaus generate your report from information they receive from your creditors however, they do not verify the information. 80% of all credit reports will have some sort of inaccurate information. Look for everything from outdated information to typos.

Keeping your credit report is a true reflection of you, like it or not. If the negative information in your report is true, only time and improved habits can change that. Late payment and charged off accounts remain on your report for 7 years, bankruptcies for 10. Most creditors look for a pattern of payment rather than focusing on one-time or rare occurrences. So consistent on-time bill payments will improve those blemishes.

3. The Double D Strategy

Dispute and document. A bad report costs you money. So it pays to be thorough. You can either complete the dispute form provided with your credit report or write a letter. Clearly identify each mistake and why it is wrong. A recommendation is to send a copy of your credit report with the mistakes circled with supporting documentation. Keep copies for yourself. The credit bureau must investigate any relevant dispute within 30 days of receiving the letter. Any item that is not verified as accurate by the creditor is removed. As long as that charge is a discrepancy, that dispute will show up on your report. If the credit bureau makes any changes to your credit file, it will send you the results and a free credit report. Once the negative item is removed from your credit report, they cannot put it back on unless a creditor verifies its accuracy and sends you written notice.

4. Solve and dissolve debt

Now it is time to devise a spending plan that reduces your debt and sets you up to pay on time.

If you are having difficulty making payments, be proactive. Call your creditors and negotiate to keep your accounts from being reported as delinquent or "bad debt." You can ask for reduced monthly payments or change your due dates to balance out your monthly bills. However this would be a short-term strategy.

Close out unneeded or unused credit accounts.

The more credit cards you have the lower your score, even if you pay on time and don't carry a balance. Potential lenders worry that you'll go on a spending spree. Close out newest accounts sot that you don't lose your longer credit history.

Close out accounts slowly over several months.

Verify that all accounts you've closed are reported as "closed by consumer."

You can establish a solid credit rating with two to four major credit cards. Remember that cutting up a card doesn't close out the account.

Deal with any collection accounts.

Unpaid collections are worse than paid collections. You can negotiate a pay-off settlement that reduces your bill, plus demand that all derogatory remarks are removed from your credit report or at least reported as paid in full. Be sure to get verbal agreements in writing before sending your payment.

Other tips:

Even if creditors offer to raise credit limits, allow yourself only moderate credit limits.

Keep your balances low and avoid revolving balances.

5. Add stability to your credit file

Build a solid credit history. Secured credit cards offers those with no credit history and those repairing there credit this opportunity. Shop around for the best deal available but limit your applications. Credit bureaus look at how many new accounts you've opened and the number of inquiries for new accounts that are listed. A sudden flurry of inquiries results in a lower score, because many times consumers anticipating money problems increase their credit lines. Inquiries made by creditors wanting to make prescreened credit line offers are not counted.

Finally, open a savings account. This shows creditors that you are working to save and that you have reserves to repay debts.