How to clean up your credit report

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The information on your credit report can make or break your next loan or credit card application. Taking a moment to review and clean it up can boost your chances of approval and discover surprising ways to save money and increase your credit score.

Lenders check your credit report when you apply for financial products, such as credit cards and loans, as well as apartments. The information on your credit report helps lenders assess your ability to repay your debts. If there is any inaccurate information on your credit report, it can compromise your approval rating and affect the terms you receive.

In fact, roughly one in four Americans have an error on their credit reports, which means there is a lot of cleaning up to be done. In addition to spotting mistakes and fixing them, you can work on paying off your debts to improve your credit score.

Below, CNBC Select reviews the steps you can take to clean up your credit report so that you can have a healthy credit report.

How to clean up your credit report

  1. Request your credit reports
  2. Examine your credit reports
  3. Dispute Credit Report Errors
  4. Pay off all debts

1. Request your credit reports

2. Examine your credit reports

Once you’ve extracted your credit reports, go through each one and verify that the information listed is correct. Review the following factors:

  • Personal informations, such as the name and address shown on your account
  • Account Info, such as balances, credit limit, payment history, and current status (active, inactive, or closed)
  • Bankruptcy and collection data, for example if one of your accounts was over 30 days past due and sent to a collection agency

3. Credit report errors in case of dispute

If you encounter any errors on your credit report, initiate litigation as soon as possible. You should initiate the dispute directly with the credit bureau that holds the inaccurate information, and this can be done online or by mail.

If the dispute resolves in your favor, the credit bureau must legally report the problem to the other two bureaus. However, you can also send a notice to the other two offices to cover your bases.

And if the dispute has been denied, you can still file a written statement that can be included on your credit report or take other action with FTC or the CFPB.

For more information, see our step-by-step guide on how to dispute a credit report error.

4. Pay off all debts

If you have persistent credit card debt, you should work on paying it down, especially since your credit utilization rate, or the percentage of total debt you have over your total credit limit, is a important factor in your credit score.

There are several ways to pay off credit card debt. Here are some options:

  • Make a balance transfer: By transferring your balance to an interest-free card for up to 21 months, you can pay it off faster and cheaper than carrying debt on a high interest card. The Citi Simplicity® Card provides one of the longest introductory balance transfer periods at 18 months, after which there is a variable APR of 14.74% to 24.74%. Balance transfers must be made within 4 months of opening the account.
  • Consolidate your debts with a personal loan: Since balance transfer cards often require Well Where excellent credit, you may consider purchasing a Personal loan to pay off the debt. Personal loans often have more acceptable credit requirements and are useful for large debts. A personal loan will help reduce your rate of use of credit since it is an installment account (which is not taken into account in the use), while credit cards are accounts renewables (which directly influence use).
  • Redeem rewards: If you have accumulated cash back, points or miles, you can redeem them for credits on your statement to help you with part of your bill. Keep in mind that the credit you will receive will likely only cover part of your debt, so you may need to combine this option with another, such as a balance transfer card.

If you don’t have credit card debt, you should continue to pay off the balances on time and in full each month. It is also important to maintain a low rate of credit utilization, preferably less than 10%.

Benefits of cleaning up your credit report

After cleaning your credit report, you can benefit from a variety of benefits. For starters, you won’t have any errors on your credit report, which can strengthen your credit history. Additionally, you may see an increase in your credit score if you remove negative information and / or pay off your debts.

Paying off credit card debt, whether through a balance transfer or a personal loan, can also save you money on interest charges. This can allow you to use the extra money you would have paid in interest for an emergency fund or high yield savings account.

Having a clean credit history and a good credit rating can also help you increase your chances of getting approved for credit cards, loans, and mortgages, as well as your ability to qualify for the best interest rates.

Editorial note: Any opinions, analysis, criticism or recommendations expressed in this article are the sole responsibility of the editorial staff of Select and have not been reviewed, endorsed or otherwise approved by any third party.

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