Many people ask me about erasing bad credit and if it can be done. The simple truth is that it can indeed, but how quickly it can be erased is something else entirely. To erase bad credit legally and permanently, you must take one of a couple of different routes and follow the steps. We’ll go over how this can be done to improve your credit score and to ensure that your credit report is completely clear, as well as how to add a good credit history to your report so that you will be financed in the future when you decide to apply for your next car, personal loan or mortgage.

To erase bad credit the actual item must be removed from your credit report. This can be done a couple of ways. One of them is fairly straightforward and requires that you make a deal with the original creditor to remove the item, usually because you pay it off. If you contact them and offer to pay off the entire amount of the loan, if they will agree to remove the item, then you may get good results. Make sure that you get any agreement in writing however, because if they forgot or choose not to follow through you will have proof that you can submit to the credit bureaus.

Another way to get bad credit erased and fix a bad credit score is to dispute information. Many people don’t know that if you dispute items on your credit report that it is the responsibility of the company that reported it to verify the information. If they are unable or unwilling to do so, then the record must be removed from your credit report. They must provide this verification within thirty days so many times when you dispute something it gets removed simply because the company didn’t verify it, either because they couldn’t, or because they couldn’t get to it in time.

To qualify for loans bad credit must be erased. But there are other factors that influence your approval. One of these is income.  If you have a high income then you will be considered much more carefully, even if you have had past credit problems. A person with excess cash after the rent and food bills are paid is much more likely to pay on their credit card or loan if they have income readily available, as opposed to someone who is barely scraping by and may have to choose between paying the loan payment and other bills.

Another factor that influences approval is your debt to income ratio. Your DTI is how much of your income before taxes that goes toward your debts. This percentage should be thirty five percent or below. Any more than that and it starts affecting your credit score and making creditors wonder if you have too much debt to take out another loan of have another credit card available. Having an income of 50,000 or more and a debt to income ratio of thirty five percent or less are both factors that will make a difference on borderline credit scores when applying for new credit.