F&I: How to Clean up a Credit Report

The process of trying to clean up a credit report takes time and patience. Some companies claim to be able to clean up a credit report and improve the credit score immediately. This is almost impossible and any company that guarantees it can do that instantly should be investigated very carefully.

Some of your customers are not approved for financing because of their low credit score.  There are ways to clean up a credit report, which can result in increasing their credit score. 

Several companies offer services to clean up a credit report for a large fee. Most will do nothing more than you can do for yourself to clean up your credit report.

The process of trying to clean up a credit report takes time and patience. Some companies claim to be able to clean up a credit report and improve the credit score immediately. This is almost impossible and any company that guarantees it can do that instantly should be investigated very carefully.

Here are tips on how to clean up a credit report and maintain a good credit score:

  • Minimize credit inquiries
  • Pay bills promptly
  • Pay off revolving credit cards monthly
  • Leave cleared credit accounts open
  • Switch to credit cards with lower rates
  • Ensure your oldest credit account is in the credit report
  • Do not hold more than two major bank cards

If you have negative points on your credit report due to errors, then have them removed. The removal of just one or two errors could clean up a credit report dramatically. You don’t have to pay a fortune to have errors removed either. The one great advantage of the current credit report system is that the consumer can demand verification of any entry on their credit report.

There are several other points that need to be considered and identity theft is one of the major issues. Always keep an eye on your credit report as identity theft can make it hard to clean it. Make a point to get your free annual credit report so that you can be aware of possible identity theft at the earliest stage.

It is also essential to keep your financial affairs in order. Obviously, if they are in a mess, then it is going to be much harder to begin to clean up a credit report as you need documented evidence to dispute entries in your credit report.

Once you have begun the process to clean up your credit report, it is important to be patient and persistent. Not all issues will be resolved overnight, but it will be worth it in the end.

There are several ways that your customers can improve their credit history report:

  • Maintain a good payment record to prevent negative entries on your credit history report. Late payment of bills leads to a poor credit rating and problems obtaining loans and other credit, as well as other services that rely on a credit check.
  • Lenders always check the credit history report to see that a person is not living beyond his/her means. As a guide, non-mortgage credit payments on a credit report should not exceed more than 15% of after-tax income.
  • Lenders also look to the credit history report for responsibility and employment stability. Consistent employment can improve the person’s credit rating as it gives lenders confidence that the person will be able to afford repayments.
  • Credit inquiries should be kept to a minimum. Whenever a person’s credit rating is accessed, a note is made in the credit history report. Avoid giving credit card companies reason to access the credit history report unnecessarily and frequently.
  • Keeping too many credit cards gives an adverse effect on the person’s credit history report. The credit rating formula reflects the difference between the amount of credit a person has and the amount he/she is using. Reducing the total credit can improve the credit rating immensely.

If your customer is considering buying a new vehicle, then using a credit report service to review their credit report and determine their credit score is a good first step. If necessary, a financial professional can look at the credit report and explain how to interpret it and what sections are considered important to a lender. For most lenders, it is the credit scores. If the credit score is too low, look at credit cards. The credit report service can help identify these and other areas that require attention. Many borrowers find that spending a six-month period concentrating on making payments on time and paying down high credit card balances can significantly enhance their credit report and raise their credit score. Often, a credit report service will recommend this strategy to get a credit report into better shape.

If your customer decides to use a credit report service, they’ll receive a confidential report that shows what lenders think, their financial habits and trustworthiness. If they can improve their credit score, then their investment in using a credit report service is a worthwhile one. Credit report services vary greatly as to the actual standards and costs of their credit report service. It is worth shopping around for the best credit report service deals and read reviews and recommendations of the various credit report services on consumer websites. t

Emre Ucer is the managing partner of MotoLease LLC. He oversees the development of solutions for the motorcycle and powersports industry to fit even the most credit-challenged riders.

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