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3. Dispute errors on your reports

Once you’ve found mistakes on any of your credit reports, it’s time to challenge them. Luckily, the bureaus are legally obligated to try and resolve mistakes. You can request a correction online or by mail or phone.

Report your errors directly to the credit bureau where you received your report. You’ll need to provide documentation, such as proof of your identity, the erroneous account information and any documentation that proves the error is false, such as court documents or credit card closing statements.

File your free dispute with:

Experian Disputes

Experian

P.O. Box 4500

Allen, TX 75013

Equifax Disputes

Equifax Information Services LLC

P.O. Box 740256

Atlanta, GA 30374-0256

TransUnion Disputes

TransUnion Consumer Solutions

P.O. Box 2000

Chester, PA 19016-2000

You should also contact the lender or creditor that issued the account to let them know of your dispute and the inaccuracy. Oftentimes the lender can correct the information on their end, which should update your reports with the three main credit bureaus. In most cases, you should hear a response to your dispute within 30 to 45 days.

4. Pay late or past-due accounts

In addition to reporting the errors on your credit report, you should focus on paying overdue balances on your accounts. Until a payment is 30 days past due, it isn’t considered late by the credit bureaus.

However, once a payment is beyond 30 days past due, creditors and lenders can report your account to the credit bureaus—which can ultimately impact your score and creditworthiness for up to seven years. Typically, the longer your payment is overdue, the worse it is for your credit.

If it’s too late to prevent a late payment from being added to your credit report, there are ways you may be able to remove a late payment or negative item after it’s been reported.

When do collection agencies get involved?

If an account has a past-due balance of more than 30 days, your creditor may turn your account over to a collection department or agency to seek the funds directly from you. When an account is sold to a collection agency, the account can be noted on your credit report—often having an enormous negative impact on your credit score.

Collection agencies work to collect funds on amounts due for credit cards, personal loans, auto loans and mortgages. Collection entries should fall off of your report after seven years. If the collection information is incorrect—just like any other error—you can file a dispute.

What is a charge-off?

When payments are 180 days (or six months) past due, your credit card will become “charged off”—meaning you no longer have the option make regular minimum payments. Your creditor considers the debt as a loss in their own records and cancels your account, and you’ll only be able to pay the balance in full. You may be charged a late fee for each additional month that passes.

Being charged off greatly damages your creditworthiness. Your lender can even increase your interest rate to the penalty rate, which is often the highest rate possible. In addition, your creditor may assign the account to a collection agency. If you can’t afford to pay the amount in full, talk with your lender about payment options. If an account goes to charge-off status, this derogatory mark will remain on your report for seven years.

What is a pay-for-delete?

A pay-for-delete is an agreement between a consumer and a collection agency to remove a collection account from the consumer’s credit report—with an understanding that they will pay the full amount or a lesser agreed-upon amount.

You can send a pay-for-delete letter to your creditor asking them to remove the charged-off account from your credit report in exchange for paying the past-due balance.

5. Increase your credit limits

Credit card companies give each borrower a credit limit—denoting the maximum amount that can be spent. Depending on the credit card and your creditworthiness, your credit limit might be a few hundred or a few thousand dollars.

If you ask your creditor to increase your credit limit—and they grant it—it could improve your credit score by affecting your credit utilization ratio.

6. Keep your credit utilization low

You’ll also want to consider your credit utilization ratio—meaning, how much you owe on all of your accounts compared with your total available credit.

For example, if you owe $5,000 across all of your credit cards and you have $20,000 in total available credit, your credit utilization ratio is 25 percent (5,000/20,000). Experts often recommend aiming for a credit utilization threshold of 10 percent or less, although having a ratio of up to 30 percent usually doesn’t impact your credit score much, if at all.

Once your ratio is above 30 percent, it may begin to negatively impact your credit standing. By increasing your credit limits (without increasing your balances owed), your credit utilization ratio should decrease.

Pro tip: Opening a new credit card increases your total available credit, which can help lower your credit utilization ratio, so long as you don’t also increase how much you owe.

7. Pay off high-interest, new credit accounts first

When you have multiple balances to pay off, there are two main approaches to take.

You can either pay off the account that suffers from the highest interest rate, such as paying off a card with a 14.5 percent APR before addressing a balance with only a 7 percent APR.

Or, you can pay off your account with the lowest balance first, so the balance no longer incurs interest. For instance, if you have a new credit card with a balance of only $400, it may be advantageous to pay that amount in full, rather than having continual interest build on that account. By paying off an account in a lump sum, you’ll also have one less account to think and worry about. Of course, you’ll still want to make at least the minimum payments on your other accounts.