Keep the number of credit cards you have to a minimum so you don't forget to pay each of them. Remember, only apply for cards for which you believe you will be approved.  

Make sure you have an American Express, Visa, MasterCard or Discover card and keep on top of your payments. If you can't get approved for one of these cards, try a “secured” credit card, which requires a cash collateral deposit that becomes the credit line for your account. For example, if you put $500 in the account, you can charge up to $500. Some banks may even reward you for making payments on time and will add to your credit line without requesting additional deposits (many banks are VERY quick to do that…to your possible detriment!).

A Word on Secured Credit Cards Before you sign up for a "secured" card, make sure that the card issuer will report your credit information (i.e. your record of on-time payments) to the major credit bureaus.  Some secured cards won’t. FYI: Gasoline cards or small bank loans aren't usually reported to credit bureaus, unless, of course, you don't pay on time!

STEP 3: CLEAN UP & NEGOTIATE

Clean up old credit blemishes. Credit bureaus can keep accurate credit information on your credit report for up to seven years. But they only report the information creditors give them. So, try to negotiate with the creditor who reported the information to have it removed from your record.

For example, if you have a Visa card on which you were late on a payment or two in the past, but are all paid up now: Call Visa and ask them to delete the late payment information. Creditors may also be willing to negotiate if you have unpaid debts that you can now pay off.

You’ll read more on how to negotiate specific items, one by one, on page 4 of this report.

STEP 4: DISPUTE

If you think information on your credit report is inaccurate and you have tried to get it corrected but can't, put a letter of explanation in your credit file. This letter must be given to anyone who looks at your credit report. To have the greatest impact, make your letter brief, unemotional and factual.

You can also request — and the credit bureau must comply — to have the word "disputed" listed next to any item on your report with which you disagree.

One last word about credit cleanup: Avoid “for-profit” credit repair clinics and seminars.

Many cost you big bucks (that you don’t have) and, at best, may give you the same results you'll get using the steps listed above yourself — which won't cost you a penny! (At worst, they’ll take your money and do nothing to help you.) Click here to read the truth about credit repair services. Check out www.NFCC.org and  www.aiccca.org for more information.

Now…in the next section…we outline some more details re: how to dispute negative items.

More on Negotiating and Disputing Bad Records

Creditors WILL remove negative items from your report, but typically not without some push from you. (Unless, of course, these records have been naturally purged from your account due to age — way too long, in our opinion, for them to reside on your credit report!)

Getting this unfavorable information removed all boils down to a few negotiating skills and a little paperwork.  And time. So get busy!

Here are a few tips to help shorten the lifespan of those credit dings on your report:

Tip #1: Ask For a Little “Goodwill”

To remove “late pays” (30, 60, 90 days, etc.) from your credit report, mail a letter to your creditor explaining why you were late in that particular instance... and ask your creditor for their "goodwill" to remove it.  This usually works well for accounts that are still open with a current line of credit.

Tip # 2. Make Offers

For items that are in collections or are way past due, you’ll likely have to directly contact the collection agency.  If the item has gone to a collection agency, deal with them and don't bother calling the original creditor.

If you have the funds to pay a percentage of the outstanding debt for example, 50% of it — offer to pay it if they remove that item from your report.  (Note: They need to remove it and not just mark it “Paid”!) As always, get the agreement in writing.

Tip #3. Dispute Specific Items

 

A Word of Caution... If you’re carrying a balance on a credit card, do NOT use it for everyday purchases.  You’ll pay interest from the minute you make a new purchase with that card.  Instead, opt for the card that has no balance — you won’t be charged any interest as long as you pay it back in full every month.

You can dispute items with each creditor by way of phone, letter, online or via e-mail. If you have negative items on your credit report that are older than 7 years, immediately contact those creditors to have those items removed.

Here are some tips to help you handle the dispute:

1. Start your dispute directly with the credit bureau, not the creditor.
2. Contact the creditor in writing with the disputed information and a letter.
3. Maintain all records of your dispute, and when sending mail, send it "return receipt requested."
4. Take notes of any telephone conversations you have and make note of the other party's name, date and time of day. If you file online, print out everything and save your records.
5. Be patient. Resolving disputes can take months, especially if your report contains multiple errors.

Tip #4. Make Them Prove It

By law, within 30 days, the creditor must prove that the item that you’re disputing is accurate. If they don't, the item will be removed from your credit report. If you have additional evidence that it’s incorrect, be sure to submit that evidence along with your letter.  Remember: The burden of proof is on THEM.

Lastly, if, after all is said and done, you don't have a resolution on a large discrepancy, consider hiring a lawyer. Credit errors cost higher interest rates when you need to borrow.