By Dan Miller, WCI Contributor
Your credit score is one of your most important assets, and it's crucially important to make sure you take good care of it. Even though a good credit score is not a tangible asset in the way a car or a house is, it still plays a key role in your overall financial health. Your credit report may include negative items that are dragging down your overall credit score. It's important to regularly monitor and review your credit report and address or remove negative items from it. Fortunately, it's fairly straightforward to remove these negative items from your credit report yourself.
What Is a Credit Report?
Your credit report is a comprehensive record of your financial behavior and credit history. You have a credit report from each of the three major credit bureaus—TransUnion, Equifax, and Experian. Potential lenders, employers, landlords, and others may view your credit report to assess your overall creditworthiness and make decisions about you. Your credit report contains information about your payment history, outstanding debts, and credit accounts. It also contains public information such as bankruptcies or tax liens as well as a list of recent credit inquiries by lenders.
All of the information that appears on your credit report is used to calculate your overall credit score. Because your credit score is used to determine things like whether you'll be approved for a loan or what interest rate or terms you'll qualify for, it's imperative that you ensure the information on your credit report is correct. Reporting or removing negative items is one way to make sure your credit report contains the most accurate information possible.
More information here:
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5 Negative Items That Can Appear on a Credit Report
Negative information can appear on your credit report due to mistakes or inaccuracies (like being confused with someone with the same name), or it may be on your credit report due to mistakes you've made in the past. Here are five common negative items that can appear on a credit report:
- Late payments
- Collections
- Charge-offs
- Bankruptcies
- Judgments
Each of these items can have a drastic negative impact on your credit score, so it's important to do what you can to remove these negative items from your credit report.
Negotiating with Credit Bureaus and Creditors
The exact way that you'll remove these negative items from your credit report depends on how that negative information got there. There will be a different process depending on whether it's an error.
Removing Inaccurate Information By Contacting the Credit Bureau
If you have inaccurate information on your credit report, you'll need to clean that up by contacting the responsible credit bureau. You are legally entitled to one copy of your credit report each year from each of the three major credit bureaus, which you can access at annualcreditreport.com. It's a good idea to regularly review and monitor these credit reports. If you see inaccurate, incorrect, or duplicated information, you can contact the credit bureau directly to have it corrected.
Removing Other Negative Items By Contacting Your Creditor
If you have a negative item on your credit report that is a valid entry, then it's possible to work with the creditor in question to have it removed. This may involve contacting the creditor to pay the outstanding amount or offering to settle the debt in exchange for them removing the negative information from your creditor directly. Programs vary by creditor, so contact yours directly to see what options may be available.
More information here:
10 Benefits of Keeping Your Credit Score in Good Health
When to Ask for Help
While there is a fair amount that you can do to remove negative items from your credit report yourself, it's also important to realize when it's best to ask for help. If you have a simple mistake or a small amount of errors you need to correct, you can probably handle it on your own. But if you have a more complicated situation, it may make sense to work with a professional. Look for a nonprofit credit counseling agency that specializes in helping fix inaccuracies and negative items from your credit report and look for one that has good reviews.
The Bottom Line
Your credit score is one of your most important assets, and it's calculated based on information contained on your credit report. Your credit report has a list of information about your payment history, outstanding debts, and credit accounts along with public information such as bankruptcies or tax liens. If you have inaccurate or incorrect information on your credit report, you can contact the credit bureau to have the information corrected, while if you have negative information that is accurate, you may have to work directly with your creditor. In either case, it makes a lot of sense to regularly review and monitor your credit report to make sure that your credit score is as high as it can be.
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