While it would be good to develop the habit, most of us don’t check our credit reports on a regular basis. If you’re really good at managing your finances that may not be a big deal but more often than not, there are things we can improve about our credit report.
And it’s not uncommon that things will sneak into your credit report that are not even true. And having errors in your report can potentially cost you hundreds or thousands of dollars. So here’s how to spot and fix credit report errors.
Why you should check your credit report regularly
Checking your credit report isn’t just about knowing how your finances are doing but about spotting errors. Errors in credit reports are not uncommon. Up to 25% of reports have some error and about 1 in every 20 credit reports contains a serious mistake. Having an error in your credit report can have severe consequences for you, regardless of whether you’re a consumer or a business.
When banks lend you money or when you apply for a mortgage, a credit check is made to decide whether to approve your request. When insurers determine your rate or if, as a business, you need to obtain a surety bond your credit report is also reviewed. Landlords and employers often also review applicants’ reports as an additional source of information to help them make up their minds.
Naturally, you would want to have your credit report cleared of any type of items that are false or not related to you. This will help you save money, but also have your loans, insurance or surety bond approved.
What kinds of errors occur in credit reports?
Some common errors that occur on credit reports include:
- Irrelevant or inaccurate information such as confused names, addresses, social security number, or date of birth
- Outdated information about bad debts which shouldn’t be appearing anymore
- Paid-off debt which appears as unpaid because it hasn’t been reported by the creditor
- Information from an ex-spouse such as debts due to joint accounts
- Issues related to identity theft and credit card fraud
- Wrong payment status of an account
- Incorrect notations for closed accounts
All of the above types of errors can be disputed. To do so you must first get your credit report and go through it. By law, you are allowed to have a free credit report issued to you by each of the three major credit bureaus (Equifax, Experian, and Transunion) once a year. You are also allowed to know who has received your credit report in the last two years if it was for employment purposes, and in the last year for other purposes.
If an application of yours is denied on the basis of the information in your credit report, you have the right to know the name and address of the credit bureau which provided the information. Finally, you can get a free copy of your report within 60 days of having an application denied, due to the information provided by a bureau.
Keep in mind that if there are errors, it is your responsibility to dispute them. Credit bureaus, on the other hand, and the companies that supply them with information are required by law to investigate your requests. See below how to address such issues and file your disputes.
How to fix credit report errors
1. Review your report
Once you get your report, review all major items. If you notice anything that’s not correct or should not be there at all, make copies of the pages on which these errors appear. You will need to attach these once you file your dispute.
2. Write a dispute letter
Begin with writing a dispute letter. If you found multiple errors in your report write one dispute letter per error. While that may seem time-consuming it will fasten the pace at which your disputes are resolved. And you will be able to track your disputes more easily.
To write your dispute letter, you can use the sample letter for disputing errors provided by the U.S. Federal Trade Commission (FTC). Equifax and TransUnion have dispute forms which you will need to fill out as well, and include in your dispute letter.
Even though larger credit bureaus now allow you to post your dispute online, the FTC recommends that you still do it through regular mail. Online forms can limit the detail you can provide about your dispute, and you may end up having to accept legal language which you don’t want to.
3. Be very detailed in your request
Be as clear, concise, and detailed about what it is that you disagree with and why. Include the copies of the pages of your report that show the errors you are describing. Explain why what you are disputing is wrong.
Include proof that substantiates your claims. This may include payment records, court documents, bank account statements and any other type of information that proves your point. By backing your claims up, you will avoid having your dispute dismissed due to lack of information.
4. Make copies of your dispute letter and all supporting documentation
Before you send your dispute letter to the credit bureau make sure to copy and document everything. If, while writing your letter, you have any conversations or correspondence with your bank, the credit bureau or a lender, keep records of these as well. Note their time, the person(s) you spoke to, and the outcome(s) of those exchanges.
This will help you track the process, but will also help you keep the bureau accountable if they should fail to follow up. It will also provide you with plenty of proof for your own actions if you decide to escalate the escalate the dispute and take legal action.
5. Mail your dispute letter
When you are ready with your dispute letter, send a copy to both the credit bureau as well as the company that provided them with information (even though credit bureaus must notify information providers anyway). Mail your dispute letter via certified mail and request a return receipt. According to the FTC, credit bureaus usually investigate disputes within 30 days.
Once your dispute has been investigated, you will hear from the credit bureau whether your dispute has been accepted and resolved. If it has not been resolved, you could try contacting the information provider directly and dispute the information with them.
If this does not help either, you can consider escalating the dispute or request that at least a dispute statement be included in your file and any future reports.
More tips on fixing credit report errors
Do you have any other tips about how to fix credit report errors which you would add to the suggestions above? Leave us a comment below, we would like to hear from you!
Vic Lance is the founder and president of Lance Surety Bond Associates. He is a surety bond expert who helps business owners get licensed and bonded. Vic graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan’s Ross School of Business.