In the mid 1990's, credit scores were born as a tool for mortgage underwriters. Now all creditors use your credit report as a benchmark determining your credit worthiness. Your credit report shows how you pay your bills and how you deal with credit. Your scoring and history can determine if you can buy a car, house, or even rent an apartment. Be prepared, clearing your credit history is a process.

Your report

Just as it took time to get into a situation of bad credit, it will take patience and work to clear up your report. You are entitled to one free copy per year of your credit report from all three credit reporters -- Equifax, Experian, and TransUnion -- at annualcreditreport.com. It is important to request a copy of your credit report to determine if there are any errors. Follow up the errors by using the dispute process. There is an online dispute process that all three credit reporters have on their web pages. Mail the same information you used online for supporting evidence. In the letter you send to clear up errors, list the account information that is wrong and why, and ask for resolution within 30 days. Request that, once the information is corrected, the company send the updated report back to you. There are laws that limit the time that bad credit can stay on your report: 10 years for bankruptcy and 7 1/2 years for negative payments.

Steps to clearing credit history

After you have taken care of any erroneous reports on your credit report, look at your paying habits. Neglecting paying your bills in the past will show up on your credit report. Start now, change that habit. Pay on time. It will not change your history but it will show positively by improving your credit score. Pay any outstanding debts, or work out a payoff program. Try not to go further into debt; this will adversely affect your credit record. You will have an easier time applying for a loan if your credit record shows you are being fiscally responsible now.

What is on your credit report?

- Your credit history, auto loans, mortgages, credit cards (including dates you opened all accounts), and collection history, will be found on your credit report. - Personal information such as your social security number, your birthdate, address, and working history. - Inquiries made, such as employers, insurers, businesses and banks. - Public records, bankruptcy, foreclosed or court judgments. - Any problems dealing with finances that led to a court resolution.

Caution

According to the Home Buying Institute, companies that say they can fix your credit report are usually scams, only wanting to take your money. There are only two ways to fix your credit history: disputing errors and changing your way of handling fiscal responsibility.

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Home buying Institute

Resource:

Credit Karma

NYCity Weddings

National Association of Consumer Advocates