Spring Cleaning for Your Credit

As the weather warms in spring, you might give your home an annual deep clean to clear out the remnants of winter. But I believe the phrase and practice of spring cleaning shouldn’t be limited to your home. If it’s been a while since you checked up on your credit reports, you may find that they’re in need of some attention.

In all seriousness, your credit reports and scores have a huge influence over your financial life. Just sitting back and assuming your credit is in decent shape is a dangerous approach. I strongly suggest you follow these five steps, none of which will cost you anything more than a few minutes of your time, to give your credit a thorough cleanup.

Step 1: Check Your Three Credit Reports

Step one is to check a copy of all three of your credit reports. It is practically impossible to build an effective plan to improve your credit without first understanding the current condition of your credit reports. Thankfully, it’s easier than ever to get copies of your credit reports.

You have a lot of options when it comes to where you can access your credit reports and scores. First, you can claim a free, no-strings-attached copy of all three of your credit reports once every 12 months at AnnualCreditReport.com. There are also many free and fee-based credit monitoring services which will offer you access to some or all three of your credit reports and scores. I’m a firm believer that if you’re entitled to free credit reports, you should claim them all.

Step 2: Dispute Errors

After you’ve secured copies of your three credit reports, it’s important to see if there are any errors. In other words, you should check every line of your credit reports for mistakes. If you discover inaccurate information on any of your credit reports, then you have the right to dispute the validity of those items with the credit reporting agencies (CRAs), at no cost.

Once you’ve initiated a dispute with a CRA, they will have to investigate your claim. The disputed item must either be validated by the data furnisher (the company that reported the information to the CRA in the first place) or deleted from your credit reports, generally within 30 days or less.

Step 3: Pay Down Credit Card Balances

One of the most actionable ways to polish up your credit is to work on paying down your credit card balances. FICO and VantageScore, the two most commonly used credit scoring models, focus on your credit card accounts and how much of your credit limits are utilized in the form of a balance.

The higher your balance to credit limit ratio climbs, the lower your scores will fall. Paying down – or, better yet, paying off – your credit card balances will not only save you money in interest fees, but can also give your credit scores a nice potential boost as well.

Step 4: Make Sure Personal Information Is Accurate

In addition to information about your account management habits, your credit reports also contain a lot of personal information as well. For example, your name, date of birth, Social Security number, past and present addresses, and your employer all might be found on your credit reports.

The personal information section of your credit reports will not impact your scores in any way. However, if you have addresses that do not belong to you, or an incorrect date of birth, name, or Social Security number, it could possibly be a sign of a problem such as attempted identity theft.

Disputing incorrect personal information with the CRAs is a good idea to clean up any mistakes in this area of your credit reports. Point being, getting your personal information correct should be easy.

Step 5: Make a Monitoring Plan

Like cleaning your house, checking your credit reports really shouldn’t be limited to just once a year. That’s like checking your bank statements or credit card bill once a year. Even twice a year is not enough. With so many websites offering you free or inexpensive access to your credit reports and scores, there’s really no reason you can’t make a plan to easily track your credit reports at least on a quarterly basis, if not monthly.

I’m a firm believer that you should check your reports monthly. Here’s why: Every 30 days, your credit reports go through a series of updates from all of your active creditors. As such, every month your credit reports are going to look different than they did the month prior. I’d want to see those changes every month, just to make sure they’re all correct.

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John Ulzheimer is an expert on credit reporting, credit scoring, and identity theft. He has written four books on the topic and has been interviewed and quoted thousands of times over the past 10 years. With time spent at Equifax and FICO, Ulzheimer is the only credit expert who actually comes from the credit industry. He has been an expert witness in over 230 credit related lawsuits and has been qualified to testify in both federal and state courts on the topic of consumer credit.

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