Fixing bad credit is usually takes a long time. You have to faithfully pay your bills, rebuild your credit history and wait several years for the blemishes on your credit report to fade in importance and finally fall off your report.

However, there is one way to fix bad credit fast – by fixing credit report errors that are hurting your credit score.  That can bring your score up in a hurry. And it's free – while there are credit repair services that will perform this service for you – and charge you for it – fixing credit report errors is something you can easily do by yourself, with a little time and patience.

Of course, improving your credit score in this way requires that you have significant errors on your credit report to begin with. But that may not be as unusual as you think. Credit reports are the second most common complaint received by the Consumer Financial Protection Bureau (CFPB), trailing only debt collection agencies in the number of complaints the agency receives about consumer financial services and products.

So how to repair your credit report if there's wrong or outdated information that's dragging down your score and hurting your ability to get loans? And what can you do if a credit reporting agency refuses to correct credit report errors that you've identified?


A credit repair how-to

There are three major agencies that track the credit records of individual consumers: Equifax, Experian and Transunion.  Companies that have extended you credit regularly report your account status to one or all three; this information is what makes up your credit report.

Your credit report has two types of information: positive reports, about debts paid on time, and negative reports, about late payments, debts in default, bankruptcy and the like. The former gradually boost your credit score; the latter can drag it down in a hurry.

Your credit score is a three-digit number that reflects your credit worthiness. It's used by mortgage lenders, credit card issuers and others when deciding whether to approve you for a home loan, credit card or other types of credit.

The most commonly used type of credit score is the FICO credit score, which is generated by all three agencies. But because each agency may receive different information from your various creditors, your credit score will usually vary from one agency to another.


Credit scores will vary

The credit reporting agencies don't get all the information about your debt payments. Usually, only lenders that have extended you credit - such as for auto loans, mortgages, credit cards, personal loans and the like - will report your payment records and account status to the to the credit agencies.

Ongoing payments for services provided, as rent, utilities, cable/internet, insurance coverage, etc. are typically not reported to the credit agencies, though that is beginning to change in some cases. Nor are one-time expenses billed to you by invoice.

However, missed payments, delinquencies or debts referred to a collection agency are very likely to be reported to credit agencies as a negative item – even if the company doesn't report on-time payments as positive ones. So while paying your bills on-time won't always help your credit, failing to pay will almost certainly hurt.


Getting your credit reports

By law, you're entitled to receive a free copy of your credit report from each of the three credit reporting agencies once a year. The official site for doing so is - that's the site jointly operated by Equifax, Experian and Transunion. Your credit report is free, but you may have to pay to get your FICO score.

It's important to get all three reports, because as noted above, each keeps different records and may not receive the same information from all your creditors.

When you obtain your reports, go through them and check for erroneous or outdated information. What you're looking for are any errors regarding your payment history or account status. Minor errors, such as the date you changed jobs or misspelling your street address, usually won't hurt your credit.

The big things to look for are inaccurate claims of bad debts. These can include reporting that you missed a payment you actually made, that you are in default on a debt you've paid off or a claim for a debt you do not owe.

Less important is inaccurate account information, such as showing a lower limit on a credit card than you actually have, or an account marked closed when it's still open. These can have a slightly negative effect on your credit score by showing you have less credit available than you actually do, so you'll want to have these corrected.


Fixing a bad credit report

If you find such errors, you need to contact both the credit reporting agency and the company that provided the information. You may be able to clear up the matter with a simple telephone call or email; if that fails, you'll need to follow up in writing with a certified letter to both.

Tell them exactly which information you are disputing and explain why you believe it is wrong. Provide copies of any supporting documentation you may have but DO NOT send your original copies - you'll need to keep those for your own protection. Send a copy of the relevant section of the credit report as well, with the item in question circled.

The CFPB recommends sending your dispute letter by certified mail and asking for a return receipt, so you can document when it was received.

The credit reporting agency is required to investigate any claim you make, unless deemed frivolous. If the company reporting the information does not reply to the inquiry or contest you claim, the item must be dropped from your report.

At the conclusion of the investigation, the credit reporting agency must provide you with a copy of their findings (this may take six months or more). If your claim is found accurate, it must inform the other two credit agencies of the finding as well.

If the company maintains the information is correct, you can require the credit reporting agency to add a note to your credit report that the item is disputed. You also can follow up with the company directly. Seek the name of the person with the authority to make the correction and send them your explanation of the situation and supporting documentation by certified mail.

If they still refuse to accept your claim and withdraw the information, you need to decide if it would be worthwhile to hire an attorney. The extra clout that a letter from a legal representative brings is sometimes all that is needed to bring them around.


What if the creditor no longer exists?

What if the company that provided the negative information is no longer in business? In that case, it cannot contest your claim during the credit agency's investigation, so the item should be withdrawn.

If the company has merely been acquired by another one and merged into its operations, you need to take up the matter with the new parent company, which can be challenging. However, if the original company is still operating as a division of the parent under its own name, you should be able to contact them directly.


Outdated credit information

In addition to erroneous reports, you may also encounter situations where outdated information continues to appear on your credit report. Most negative items should drop off your report after seven years, though bankruptcies may continue to be reported for 10. If you have a negative item on your report that's older than those timelines, you can ask the credit agency to remove them.

The seven-year timeline generally runs from the time an event took place, so if you missed a payment in October 2008 it should drop off your report by October 2015. Be aware, though, that this timeline can be extended if the debt remains unpaid or the company continues to seek action against you. Each month the debt is reported as delinquent starts the seven-year clock anew, until some sort of final action such as a foreclosure, delinquency judgment or bankruptcy takes place.

Certain personal information can remain on your report permanently, including criminal convictions, and information provided in job applications for positions paying more than $75,000 a year or applications for credit or life insurance in excess of $150,000.

Fixing bad credit due to erroneous information on your credit report can be a time-consuming and frustrating process, but well worth it if it helps  you get approved for a loan or get a lower interest rate and better terms than you otherwise would have.