Cleaning up Your credit

Here's how to wipe your credit report's slate clean

days before ask for credit. Then you can correct any mistakes beforehand.”

Each report will include an “investigation request” form and instructions that you can use to question any items you believe to be in error. Once you submit this form, the credit bureau must investigate your claims and report back within 30 days. If an inaccuracy has been found, it will be removed from the record. If the issue can’t be resolved, you’ll be allowed to prepare a short statement (up to 100 words) giving your side of the story, to be included in future reports.

Communicate with your creditors once you’ve fallen behind. The procedures described above should help if your credit report contains mistakes. If you’ve failed to make required payments on your debt, that information stays.

In such cases, your best tactic may be to call your creditors and explain your situation. “Many creditors will negotiate with you,” says Norman Magnuson, vice president of public affairs for Associated Credit Bureaus, a trade group based in Washington, D.C. “Their main goal is to be repaid, and that won’t happen if you file for bankruptcy, which is another option. Your creditors have an incentive to be cooperative.”

Suppose, for example, your minimum payment on a credit card is $200 per month, which you can’t afford. A creditor might agree to take $100 per month, or even $50 per month, with no further interest accruing. “What’s more,” says Dave Mooney, a spokesperson for Equifax, “if you make those payments regularly, your file will be marked ‘paid as agreed,’ so your credit record will show positive results.”
Auto loan problems may require early warnings to creditors, according to Carol K. Kurth, education coordinator at Credit Counseling Centers Inc. in Farmin
gton Hills, Michigan. “Most automobile financing arrangements permit the creditor to repossess your car any time you are in default on your payments. So don’t wait until then. Try to solve the problem with your creditor when you realize you won’t be able to meet your payments.” If you can’t work something out with the creditor, you might prefer to sell the car rather than run the risk of repossession and a stained credit record.

Should you notify your creditors if you get married? That’s probably not necessary. You and your spouse will have separate credit reports as long as you maintain separate accounts. For joint accounts, though, both spouses’ histories will be included in credit reports. “Joint accounts mean joint liability,” says Yates. “Even if you get divorced, a divorce decree has no impact whatsoever on your joint debts.” If your spouse runs up large amounts of joint debt while you’re still married but contemplating divorce, Yates recommends canceling the accounts, if possible, and informing all creditors in writing that you won’t be responsible for these debts after a specific date.

Get help from reputable nonprofit credit agencies. Rather than contact a credit repair shop, call the nonprofit National Foundation for Consumer Credit (800-388-2227), whose 200 member agencies run 1,450

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