by Thom Fox

When you’re developing a long-term strategy to improve your credit, you need to focus on two main areas: the accuracy of your credit reports, and paying down credit card debt. By ensuring that the information contained in your credit profile is correct and by maintaining minimal debt, you reduce the amount of risk you present to lenders. The less risky a candidate you are, the lower the interest rates you’ll be offered. 

Ensure your credit reports are accurate
It has been reported that close to 40% of all the credit reports in our country contain errors. This figure translates to roughly 190,000,000 incorrect reports. To ensure that your report is accurate, order a copy of each of your credit reports from TransUnion, Experian and Equifax. When you receive your reports, review the information closely. Be on the lookout for accounts that may not be yours, and check to be sure that your creditors have reported your payment history correctly.
 
If you find inaccurate or incomplete entries, you can take steps to correct them. You can file a dispute with the credit-reporting agency, listing the inaccurate information. Your dispute should be in writing and contain: 

1. your complete name and address

2. a clear identification of each item in dispute

3. an explanation as to why you’re disputing the information

4. a request that an investigation be initiated 

Be sure to include copies (not originals) of documents that support your claim. Send your letter by certified mail, return receipt requested, so you have proof that your claim was received. Also, keep copies of your dispute letter and enclosures for your records. 

By law, the agency must investigate the item, usually within thirty days. During its investigation it must communicate with the information provider regarding the item in question so the provider can determine whether or not the dispute is valid. The information provider must conduct a review of the claim and report its findings to the agency. If the information provider finds that the disputed information is inaccurate, it must then notify all three credit-reporting agencies so your reports can be updated. 

If the investigation does not resolve your dispute, you also have the right to add a one-hundred-word statement to your file, which must be included in future reports. At the conclusion of the investigation, the agency must provide you with a written account of the outcome. If the investigation results in any change, agencies are also required to provide an updated copy of your report.

Reduce your debt
While you’re in the process of reviewing your credit, develop a plan to pay down your debt. The following suggestions show how you can approach this task. 

1. Stop using credit cards
Credit cards usually charge high rates of interest. Learn to pay by check or cash for things you want or need and stop increasing your credit card debt.

2. Request lower interest rates
If you have a good repayment history, you may be in a good position to negotiate an interest rate lower than the one you’re currently being charged. You can inform the creditor about lower offers you’ve received from other lenders and request that the creditor match or even beat those offers. Even if you’re able to get your interest rate reduced by just two percentage points, you’ll experience substantial savings over time.

3. Move high-interest-rate credit card balances to low-interest-rate credit cards
If, for example, you’re being charged 21% on one card, move the balance to a credit card charging 12%.

4. Target high interest cards
Continue to send more than the minimum payments to all of your credit cards while putting the bulk of your funds toward the card with the highest interest rate. When this account has been repaid, apply those funds to the card with the next highest interest rate. Continue this process until all of your cards have been repaid.

5. Make extra payments on credit cards
When you make your credit card payments, send an additional $5.00 or $10.00. Your debt will be paid off quicker, and you’ll save on interest charges. When using this method, your creditors may recognize that you have been sending extra payments and offer you a “payment holiday.” Stay committed to your plan and continue to make payments every month, even if the debtor claims no payment is due that month.

Thom Fox is a public speaker and personal finance author who has helped develop numerous programs for young people and adults. He can be reached at thomjfox@comcast.net