If you want to get best rates on loans, you need to have good payment records. That's the reason why experts recommend checking your credit report and your score before applying for a loan, or a new credit card. Why is that so important?

The statistics says, over 70% of credit reports have some mistakes. They may vary from innocent misspelling to serious errors. The thing is, even minor inaccuracies may result in higher interest rates on your loans, they also affect your ability to qualify for the best plastic money deals. Read more to learn how to clear mistakes from your credit profile.

No wonder why most customers are horrified to discover some errors in their reports. The slightest inaccuracy may have unintended consequences. And though you may be tempted to ignore minor mistakes, you must take actions and correct them as quickly as possible, especially when it comes to rebuilding credit history.

First off, you should identify mistakes in your credit report if there are any. For this, you need to get a copy of your report from major credit bureaus. Under the FCRA (Fair Credit Reporting Act), every customer can get a free copy of credit report from any of three major bureaus once a year. Generally, people request one copy every four months, so that they have an opportunity to check their credit score online all through the year with no additional costs.

Once you receive your free copy, examine it carefully on your own. If you do find mistakes, dispute it by sending a letter including your name, address, and a description of the item you dispute. You should also explain why you dispute this or that mistake, and request for deletion of incorrect information.

Along with this letter, you'd better gather some evidence proving that a bureau needs to fix your report. You may enclose copies of related documents as a proof. Send this letter by registered mail with a return-receipt request to make sure your corrections have been received.

Reporting agencies, in their turn, must investigate your claim within 30 days. If any error is not handled within this period, it must be removed from your report.

All the more so, you should contact your creditors. You can also send them all the same photocopies you sent to the credit bureau with a short explanation of what information you're disputing and why. To make sure you don't have the same problems, you may call your issuer and ask. Every time the company reports your activity to major bureaus, it should include the notice of your dispute.

When reviewing your report, you may also find some suspicious-looking details, like unfamiliar address in your name or new accounts you never opened. Most probably, it's credit fraud. You may file fraud alerts with all three credit reporting agencies, and file a complaint with the FTC. The accounts that have been opened fraudulently must be closed.