Applying for a job? How to clean up your credit report

When you’re looking for a job or want to change careers, chances are an employer will run a background check on you and your credit report could be important.

Particularly when you apply for a job that involves finance, but not only then, your financial past can play a crucial role. What if you have a pretty bad credit report? Here is some useful advice:

Your credit score determines whether or not you will be approved for a loan and greatly affects the interest rate you will pay for borrowing the money. Your credit score also influences your insurance rates and can also affect whether or not an employer will hire you.

Cleaning up what’s on your credit report will help you increase your credit score and improve your creditworthiness. Cleaning up your credit report takes a little time and effort but it’s worth it. The following steps will help walk you through the process.

Step 1: Get a copy of your credit score

Before you can clean up your credit you’ll need to find out what your credit score is.  You can search online to find free credit score offers. Credit scores range from 300 to the perfect 850.

The average credit score in the U.S. is 723. If yours is under 620, chances are you will have a difficult time finding any type of financing but there are things you can do to clean up your credit and improve your score.

Step 2: Get a copy of your credit report

Once a year, you can request a copy of your personal credit report from any reporting agency from annualcreditreport.com. This will get you started on the road to your credit clean-up.

However, you will need to clean up any errors in your credit report with each of the major three credit reporting agencies, Transunion, Equifax, and Experian. This means at some point you will have to pay for your credit reports from the other agencies.

Step 3: Dispute any inaccuracies

All three of the major credit reporting agencies have an electronic process for disputing errors on your credit report. If you dispute an inaccuracy the creditor has thirty (30) days to validate the item.

If they don’t, the credit agency must remove the item from your credit report. If you are the victim of identity theft you should place an identity theft alert on your credit report. Contact the police and file a police report. That way the flag on your credit report will stay on it permanently.

You will also need to contact the fraud department of each creditor and provide them with the police report so the items can be removed from your credit report. If you want to learn more about different career tracks, check out this post about “Career Cruising” that might offer you some more insight.

Step 4: Request validation of charge-offs

Items you never paid and the creditor gave up on collecting the debt are called “charge-offs”. Request that the credit agency validates the debt as yours.

If the creditor does not validate the account is yours within thirty (30) days then the agency must remove it from your report. Typically derogatory items will stay on your credit report for seven (7) years, bankruptcies for ten (10).

Step 5: Settle your charge-offs

Just because an account is charged off doesn’t mean you shouldn’t pay it. It just means that the creditor gave up on collecting on it. Charge-offs are often turned over to a collection agency to be collected.

Contact the creditor collection agency listed on the debt and make them a settlement offer. Very often you can offer 40-50% of the original debt amount.

Settled debt is better than a charge-off. Make sure that the settlement offer is put into writing and ask the creditor/agency to mark the debt as “settled in full” as part of the offer.

Step 6: Ask for a goodwill adjustment of a late payment

Reach out to creditors with whom you have made a late payment by sending them a goodwill letter. This is a letter in which you ask the creditor to correct the late payment that has been reported to the credit agency. This will usually work if you have just one late payment with the creditor in the past year.

Step 7: Ask that problem accounts be re-aged

If you have a number of late payments with a creditor, contact them and ask that they be re-aged. Creditors may reward a serious of twelve (12) timely payments by correcting the previous late payments as on-time payments.

Step 8: Monitor your report

Once you’ve cleaned up your credit report, keep it clean by checking it 1-2 times per year to monitor and maintain it.

Having a sound credit report and a good score is key when it comes to your future. Many businesses rely on your credit score when you apply for a loan or when they run a background check on you when you apply for a job or want to switch jobs after your first position.

You may also want to use a credit-monitoring service for checking and monitoring your credit report. That allows you to receive an early warning of potentially damaging changes to your credit report so you can respond in a timely manner.

Credit monitoring will also allow you to detect identity theft. This type of crime has exploded over the last few years and ranks among the biggest crimes. Safeguarding your identity and protecting your credit are key. It will make sure thieves won’t be able to run up big bills on your behalf and in your name.

So monitoring your credit score and credit reports will be helpful in preventing fraudulent accounts from impacting your creditworthiness. Examining your credit reports will make sure you recognize changes in credit accounts and personal information listed in your name.

As said earlier, you can do it on your own or hire a credit monitoring service agency that will provide regular report updates and notify you when needed through alerts. Your credit reports matters when you’re applying for a job!

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