How to Clean Your Credit Reports in 6 Simple Steps

Learning how to clean your credit reports can help boost your credit score and ensure that you get the best terms and conditions when applying for loans.

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When you submit an application for financial products, such as credit cards, auto loans, mortgages, or even apartments for rent, lenders will pull your credit reports to determine your creditworthiness. Inaccurate information on your credit reports could hurt your approval odds and the terms you receive.

Taking time to review and clean up your credit can make a major difference in the types of loans you qualify for and boost your credit. Below, we’ll go over how to clean your credit reports so you can strengthen and reap the benefits of financial health.

Key Takeaways

  • Cleaning up your credit reports of inaccuracies or mistakes has many benefits for your credit.
  • Steps you can take to clean up your credit include pulling a free copy of your reports, reviewing your credit reports, paying off debt, and more.

The 6 Steps To Clean Your Credit Reports

Cleaning up your credit reports involves removing erroneous or outdated information and fixing any mistakes. It does not mean getting rid of legitimate data, such as delinquent accounts or hard inquiries lenders pull after you apply for a loan. When it comes to cleaning up your credit reports, you have various options available.

1. Pull Your Credit Reports

First, it’s a good idea to pull your credit report from all three major credit bureaus: Experian, Equifax, and TransUnion. Credit bureaus gather credit information on your borrowing habits and payment history and use that data to create your credit reports. Under the Fair Credit Reporting Act, you are entitled to free weekly credit reports from each bureau through December 2022 by going to AnnualCreditReport.com. It’s important to pull your reports from all three regularly as they often contain different information.

Note that your credit reports are not the same as your credit scores. Credit bureaus typically use your FICO® score or VantageScore in addition to their own supplementary information to compile reports. On the other hand, your credit scores get calculated based on your payment history, credit utilization, new credit, credit mix, and the average age of your credit.

                                                             Factors Behind Credit Score Calculation
How to Clean Your Credit

2. Review Your Credit Reports

Once you pull your credit reports, you should check the information thoroughly. While this may be tedious work, checking for mistakes will help you identify factors negatively affecting your credit and what you need to do to fix them. Even minor inaccuracies, such as clerical errors or credit inquiries, can affect your credit score. Aside from payment history, be on the lookout for other factors that can impact your credit, such as bankruptcy and collection data, high credit card debt, and late or missed payments.

Additionally, pay close attention to your personal information as unfamiliar line items could indicate signs of identity theft. Thieves usually use scams to obtain personal information and open lines of credit under your name, then make charges without paying. To combat this, review your account balances, credit limit, account status, name, etc., to ensure everything is accurate.

3. Dispute Any Errors

If you find any inaccurate or unfair information on your credit reports, you should file a formal dispute with the credit bureaus immediately and request to have them removed. You have the right to challenge damaging details on your reports that may be misleading or unsubstantiated. While not all negative items will be wrong, having an error on your credit report is quite common.

To file a dispute, gather supporting documents for your claim. Then, write a dispute letter to the bureau that identifies what line items you are disputing, why they are inaccurate, and request to have the errors removed or corrected. You can submit a dispute with the three major credit reporting agencies by mail or online. Expect a response from the bureaus in 30-45 days.

If the credit bureau you submitted the dispute to resolves the issue in your favor, they are legally obligated to report the change to the other bureaus. But, you may want to send a notice to them to be safe. If your dispute gets denied, but you think there is still something wrong, you can file a written statement that can get included in your credit reports. Alternatively, you can escalate the situation with the Federal Trade Commission (FTC) or Consumer Financial Protection Bureau (CFPB).

The dispute process takes time and perseverance. If you are having difficulty, consider contacting a nonprofit credit counseling service for help or working with a trustworthy credit repair service. We recommend sticking through to the end if you find errors on your reports, as the damage done to your credit could give lenders an unfair impression of your risk as a borrower.

4. Remove Past-Due Accounts From Your Reports

If you have a past-due account on your credit reports, consider writing a goodwill letter to your creditor. With this method, you would write a request to your creditor to remove the late payment from your reports and explain what happened. Typically, you will need to be in good standing with your creditor and have a history of making on-time payments for this to work.

Alternatively, you could try writing a pay for delete letter, which you can use to negotiate with your creditor by offering to pay off your remaining debt in exchange for removing the late payment. In both cases, your creditor is not obligated to forgive past-due payments or respond to your request. But, if you have a strong credit history, they may make an exception.

5. Pay Off Any Debts

If you have an existing credit card balance, you should devise a strategy to pay off your debt as soon as possible without adding any new high-interest debt. Your credit utilization ratio, or the percentage of your total available credit you use every month, makes up a large factor in your credit score calculation.

In general, the lower your credit utilization, the better. Experts recommend keeping your utilization ratio below 30% typically, I try to keep mine below 10-15% to be safe. From a lender’s perspective, using too much of your credit indicates a credit risk because you rely heavily on credit cards to fund your living expenses.

There are several ways to pay off outstanding debt:

  • Apply for a balance transfer: By transferring your balance to a 0% APR credit card, you can give yourself more time to pay off your debt at lower interest rates and significantly reduce the amount of interest you have to pay over time. Usually, promotional periods will range from 12-18 months, during which you will not get charged additional interest. Remember to pay off the entire balance before the promotional period ends so you don’t have to start paying back all that money at once with high-interest rates.
  • Consolidate debt via a personal loan: Balance transfer cards typically require you to have good or excellent credit. If you do not qualify for a balance transfer, another option is to take out a personal loan. Personal loans typically have lower credit requirements and interest rates than other types of consumer debt. Unlike credit cards, which are revolving accounts that directly influence credit utilization, personal loans are installment accounts that come with steady monthly payments and set payoff dates.
  • Redeem credit card rewards: If you have accrued cash back, points, miles, or other benefits from credit card purchases, you can redeem them for statement credits to cover some or all of your bills. In the past, I redeemed my points to pay off part of my monthly statements when money was tight.

6. Tackle Outstanding Collections

Credit collections can be a real pain and seriously hurt your credit, but there are things you can do to try and tackle your outstanding credit collections. The most important thing is to stay organized and keep track of what’s going on. Make a list of all your creditors along with the amount you owe each one. That will help keep you focused and motivated as you work on paying off your debt.

You should also create a budget so that you know exactly how much money you have available each month for debt payments. Try to make more than the minimum payment on each bill to reduce your overall balance more quickly. If you need help getting started, there are plenty of resources available online or through organizations like the National Foundation for Credit Counseling (NFCC).

Depending on your situation, filing for bankruptcy may help you get a fresh start by wiping out your debts or reorganizing them in a way that makes them more manageable. If you’re thinking about filing for bankruptcy, speak with an attorney who can help guide you through the process and explain all of your options.

Getting a Fresh Start

If you have negative information on your credit reports, focusing on establishing healthy financial habits early on can help lessen the impact on your credit. As you learn how to clean your credit and rebuild it, pay off credit card balances, and keep your credit utilization ratio low. Review your budget every month or every few months to monitor your spending habits and find areas to cut back on. If you do not qualify for a traditional credit card, consider taking out a secured credit card or credit-builder loan to establish a solid payment history.

The Bottom Line

Now that you’ve learned how to clean up your credit reports, you may benefit from various perks. You won’t have any errors or mistakes on your credit file anymore, which will likely strengthen your credit history. If you removed any negative information or paid off your debt, you may see a rise in your credit score. That can help increase your odds of getting approved for new credit cards, car loans, mortgages, and other types of loans. Additionally, you will qualify for better terms and conditions, such as lower interest rates.

The credit repair process is ongoing, so monitor your reports for errors, mistakes, or identity theft on a regular basis. Even minor inaccuracies could cause your credit score to fall, so it’s important to stay alert and be patient.

Frequently Asked Questions (FAQs)

Can You Remove Bad Credit History?

There is no one definitive answer to the question of whether or not you can remove bad credit history. Sometimes, you may be able to dispute incorrect information on your credit report and have it removed. But, you will need to provide supporting documentation to prove that the data is inaccurate for the credit bureaus to remove or correct it.

However, if the negative information is accurate, you may need to wait 7-10 years for the statute of limitations to expire. For example, certain bankruptcies may take up to 10 years to age off.

How Can I Clear My Credit in 30 Days?

There are several steps you can take to rebuild your credit quickly:

  • Review your credit reports: Pull your credit reports and look for things that may be impacting your credit scores, such as clerical errors or signs of identity theft. Understanding what is causing your scores to drop can help you work towards correcting them.
  • Pay off high-interest debt: Creditors typically report your account balances around the time of your statement billing date. These balances heavily influence your credit utilization ratio, which affects your credit scores. If you have the means, consider paying off your balance before the billing date. For example, in the past, when I used a significant portion of my credit line, I would pay off my balance several times in the same month to keep my utilization ratio low.
  • Make on-time payments in full: Make sure to pay off your balances every month in full. Carrying a balance is costly and hurts your credit history. 
We are not financial advisors. The content on this website and our YouTube videos are for educational purposes only and merely cite our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won't experience any loss when investing. Always remember to make smart decisions and do your own research!

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