I was going over my tri-annual credit report the other day, and noticed some things I needed shared with you guys when examining your credit report. Yes, I do mean tri-annual. There are three major credit bureaus, and they each give out free reports once a year, so I spread them out evenly throughout the year to read.

Anyways, first and foremost, blitz significant errors. Attack them and correct them head on! Your credit score is calculated based on the information in your credit report, so certain errors there can really cost you big. However, not everything that’s reported in your file matters to your score.

Here’s the stuff that’s usually worth the effort of correcting with the bureaus:

1. Late payments, charge-offs, collections or other negative items that aren’t yours. These are the big ones. If you notice any of these, blitz, yes blitz, them immediately like your life depended on it! Because, you know what, it just may when you’re looking to close that big loan.

2. Credit limits reported as lower than they actually are. You need to get credit for what you’ve earned. Simple.

3. Accounts listed as “settled,” “paid derogatory,” “paid charge-off” or anything other than “current” or “paid as agreed” if you paid on time and in full. This should actually be number two if I was listing this in order of importance. In any case, blitz these too.

4. Accounts that are still listed as unpaid that were included in a bankruptcy. This is the same as getting credit for what you’ve earned. If you spent the last ten years paying for your bad financial habits, consider your sins paid for. They shouldn’t be on your record still. Get rid of them.

5. Negative items older than seven years (10 in the case of bankruptcy) that should have automatically fallen off your report. This is the same as number four. Consider your debt paid.

You actually have to be a bit careful with this last one, because sometimes scores actually go down when bad items fall off your report. Believe it or not, it’s a quirk in the FICO credit-scoring software, and the potential effect of eliminating old negative items is difficult to predict in advance.

Now, here are some of the stuff that you typically should not worry about:

1. Various misspellings of your name. Believe it or not, I have an alias of Alexander J. Leigh on my credit report. I don’t know how it got there but it’s never bothered me for the last ten years it’s been on there.

2. Outdated or incorrect address information. This one is simple. People move all the time. As long as your identity has not been stolen, it’s okay to have an incorrect address. There may be someone with the same first and last name as you who has lived there.

3. An old employer listed as current. As with the old or incorrect address, this is okay. Fix it if you like, but I wouldn’t bother.

4. Most inquiries. These are not hard pulls, so the companies had only limited access to your information. Many credit card companies tend to do this so they can send out credit offers.

Just a note about number one and two, if the misspelled name or incorrect address is because of identity theft or because your file has been mixed with someone else’s, that should be obvious when you look at your accounts. You’ll see delinquencies or accounts that aren’t yours and should report that immediately. However, if it’s just a goof by the credit bureau or one of the companies reporting to it, it’s usually not much to sweat about.

Oops, here are two more items you don’t need to correct:

1. Accounts you closed listed as being open. If it has a zero balance, I would leave it alone for the time being. It should drop off by itself.

2. Accounts you closed that don’t say “closed by consumer.” Closing accounts can’t help your score, and may hurt it in the short run. If your goal is boosting your score, leave these alone. Once an account has been closed, though, it doesn’t matter to the scoring formulas who closed it. If you messed up the account, it will be obvious from the late payments and other derogatory information included in the file.

Hmmm, while we are on this topic, here are some other actions to beware when you’re trying to improve your score:

1. When you ask a creditor to lower your credit limits, it will reduce that all-important gap between your balances and your available credit, which could hurt your score. If a lender asks you to close an account or get a limit lowered as a condition for getting a loan, you might have to do it, but don’t do so without being asked.

2. When you make a late payment, it will ironically hurt a good score more than a bad one, dropping a 700-plus score by 100 points or more. If you’ve already got a string of negative items on your credit report, one more won’t have a big impact, but it’s still something you want to avoid if you’re trying to improve your score.

3. When you try to consolidate your accounts, and apply for a new account, it can ding your score. So, too, can transferring balances from a high-limit card to a lower-limit one, or concentrating all or most of your credit-card balances onto a single card. In general, it’s better to have smaller balances on a few cards than a big balance on one.

4. On the other hand, when you apply for and get an installment loan, it can help your score if you don’t have any installment accounts, or you’re trying to recover from a credit disaster like bankruptcy.

Oh, and just FYI, all these suggestions work best if you have poor or mediocre scores to begin with. Once you’ve hit the 700 mark, any tweaking you do will tend to have less of a positive impact.

And if your scores are in the “excellent” category, 760 or above, you probably won’t be able to squeeze out any more than a few extra points despite your best efforts. There’s really no point, anyway, since you’re already qualified for the best rates and terms.

Whew! Okay guys, hope this helps a bit. See you in a few!

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