How to ensure that your credit history stays clean

It is imperative for everyone to have a clean credit history. This is true because one never knows when the need for a loan may arise. This need may stem from the fact that you need to buy a house, refinance your existing mortgage, apply for a credit card or get a money loan to meet some emergency financial need.

If you have developed bad credit history over the years, your loan application is bound to be rejected, or if not, your prospective financier will take the opportunity to fleece you by charging you a high rate of interest. There are of course exceptions to this, such as caveat loans where credit checks are a rarity, but this is no reason to not ensure your credit history is clean.

Keep an eye on your credit history

The very first thing you should do is to get a hold of a copy of your credit history. This is also called a credit report and is available with the credit bureaus. You have a right to a copy of your credit report and the bureaus cannot provide one to anyone else. All they can display about your report is the credit score, which is a three digit number they calculate based on your credit history.

You will have to go to the credit bureau’s site and apply for a copy of your credit report. There will be a nominal fee associated with the process that covers postage and processing costs. The score will be sent to the last billing address that your creditors reported, so you should be prepared to collect it from there.

Scrutinize your credit report and report errors

When you get a copy of your credit report make sure you go through the details very carefully. Your report will contain information of all your creditors and the payments you made and the ones you missed or did not make on time.

For the delayed payments reflecting in the report, you should try to recollect when and where you made the payment. Credit card companies usually offer drop boxes for payment checks and their representatives collect these checks regularly. Sometimes these drop boxes are not cleared for weeks. This may be a reason your card payment was not processed in time. This is not your fault. Apart from reporting this payment as a late payment to the bureaus the card company will also charge you a fine for late payment.

You should report such anomalies immediately to the card company and send a copy to the credit bureaus. There is no use reporting only to the bureau because they will send you pre-formatted letter asking you to take the matter up with your creditor. In any case, it is your creditor who has to authorize the bureau to make changes in your report. When you file a complaint, do so through registered post so you have some evidence that you did complain. The creditors have 45 days to investigate and rectify mistakes.

You need to report every error to the bureau and the creditor to ensure that the report is revised the following month. If your creditors know that you are keeping a tab on your credit history they will be more careful while reporting and you will have ensured that your credit history stays clean.

Pay your bills on time

The other way, which is used along with the aforementioned method, is to repay your mortgage, credit card, vehicle loans and any other debts on time every time.

Paying your dues on time and keeping a close tab on your credit history is the only way to ensure that your credit history stays clean.

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