Posted by Elisabeth Leamy, Tue Apr 05 2011, 12:52am

I'm like the doctor who's always getting approached at cocktail parties by people who want free medical advice

I'm like the doctor who's always getting approached at cocktail parties by people who want free medical advice. Only my friends, family and co-workers are after consumer advice. Actually, I don't mind a bit, because living vicariously through these queries helps keep me up to date on real issues that real consumers are facing.

Recently, a co-worker, who shall remain nameless, started pinging me about once a week with credit questions. Turns out he wants to buy a house and he's doing everything right, by taking a hard look at his credit well in advance of the purchase. That puts him in a position to raise his credit score so he can get the best possible interest rate when the time comes to take out a mortgage.

My co-worker was going round and round with a debt collector who was trying to collect an unpaid bill for one of those music subscription clubs, where you get a CD in the mail every month. Turns out, way back in college, one of his roommates had signed up in his name then not paid. No surprise, he couldn't get the collector to believe his story.
Fortunately, he doesn't really have to persuade the collector. What my co-worker was trying to accomplish was to get the unpaid debt removed from his credit reports. For that, you don't have to deal with the original merchant or their hired gun collector. All you have to do is dispute the item with the three major credit bureaus that keep credit reports on all of us: Equifax, Experian and TransUnion.

I advised my co-worker to approach the three bureaus and simply state that the music account was not his. No need to go into the whole story about the roommate, which might give them wiggle room to blame him for having bad roommates. The way I saw it, this was a fraudulent account, pure and simple. Identity theft. So what if he knew the guy? It worked! Within hours of filing his dispute, one of the credit bureaus had removed the account from his report and we expect the others to follow suit.

Here's why that's such a victory: because your all-important credit score is calculated using the data in your 3 credit reports. Erroneous, unflattering information can drag down your score. In fact, in my co-worker's case, when that one small black mark was removed, his score jumped up from 648 to 689!

So here's what you do. Go to the government-mandated website to get your three free credit reports from the major bureaus. If there are inaccurate, unflattering entries on your report, simply fill out the form provided to dispute them. Pay particular attention to the following types of errors, which can drag your score down most of all:

? Old bankruptcies: Bankruptcies remain on your report for ten tough years. If a bankruptcy entry is still there after that, complain.
? Debts disposed of in bankruptcy: If you declared bankruptcy in the past, debts covered by that bankruptcy settlement should not appear on your report as past due or still payable because bankruptcy wipes the slate clean.
? Outdated lawsuits and judgments: If you paid a legal judgment, it should not be in your records anymore. If you didn't pay, it's still supposed to disappear after seven years.
? Inaccurate tax liens: Tax liens you have paid remain on your report for seven years. Unpaid ones last 15 years, longer than anything else. (Guess who makes the laws!) If there's a lien on there longer than those two parameters, dispute it.
? Outdated demerits: Late payments and charge-offs, where a creditor writes your bill off because they have given up on you, are not allowed to remain on your report after seven years.
? Duplicate debts: The same debt should not be listed more than once, particularly by more than one debt collector.
? Your spouse's bad debts: If your spouse failed to pay bills before your marriage or after your official divorce, as long as your divorce filing was handled properly, these should not be on your credit report.
? Other people's accounts: Other people's account information - good or bad - should never appear on your credit statement. A cynic might say to keep the stranger's entries if they are positive, but who's to know when that person will face a financial crisis that will ruin their credit ľand yours.
? Old credit applications: "Hard" inquiries where you apply for credit, count against you; They shouldn't remain on your report for more than two years.
? Credit you didn't apply for: If you spot hard inquiries that you didn't authorize, dispute them. "Soft" inquiries, where banks check your credit report in order to offer you a preapproved card, are harmless. Checking your own report is harmless.