Last updated October 15th, 2018
In 2012 the Federal Trade Commission, the nation’s consumer-protection agency, reported to Congress that in a study of American consumers, 26% identified at least one potentially material error on one or more of their three credit reports.
Your credit report is used by banks, credit card companies, and other lenders to determine whether to give you credit and what interest rate to charge you. Errors on your report can force you to pay more interest than you otherwise would or keep you from accessing it at all.
As a result, you should check your credit report regularly to ensure that the information it contains is all accurate.
But if, in checking your report, you discover an error, what do you do then? What is the process for disputing credit report errors? Keep reading to find out.
Article at a Glance
- Your credit report and credit score contain extensive information about your finances, based on reporting by lenders, collection agencies, courts, and other organizations.
- The first step to dispute a credit report and win is to get a free copy of your credit report from each of the three credit reporting bureaus.
- When you discover an error in your credit report, you must notify the credit reporting bureau in writing and provide evidence for your claim that the information is mistaken.
What Goes into Your Credit Report?
Your credit report is a profile of nearly all your finances–your history of debt payments, how much credit you have, and other financial details. Those details are used to calculate your credit score.
There are three major credit bureaus (Experian, Equifax, and TransUnion) that collect your information and generate your credit report and score. Each one uses a slightly different formula, so there may be some variation in your scores from each bureau. High credit scores make it easy for you to rent an apartment, take out a loan, or even get a cell phone contract.
Low scores, on the other hand, make it much harder for you to get credit and leave you with much higher interest rates. So, you want to protect your score and make sure it’s as high as possible.
There are four basic types of information that go into your credit report:
- Identity: Your name, Social Security number, address, birthday, and employment information. This information gets updated whenever you supply updated information to your lenders.
- Credit: Lenders provide the credit bureaus with information on each account you have – credit cards, mortgage loans, personal loans, auto loans, and any other accounts. They report on the date you opened the account, your total amount of credit (including your credit limits and loan amounts), and your history of payments.
- Public Records: Credit bureaus check the public records from state and local courts, including foreclosures, bankruptcies, wage garnishments, liens, collection lawsuits, and judgments against you. They also gather information from collection agencies about any accounts that have gone to collection.
- Inquiries: Any time someone checks your credit, that inquiry goes into your credit report. Some are voluntary – like when you authorize a credit check when you’re trying to rent an apartment. Others in involuntary – like when a credit card company checks your credit in order to pre-approve you for a credit card.
All of that information gets added together to generate your credit score, but sometimes there are mistakes – and those can be costly.
What Causes Credit Report Mistakes?
There are plenty of ways mistakes can make their way onto your credit report. An error in an accounting process may result in a payment being marked “late” when you really paid on time. Perhaps you have a common name and the bureaus pulled public records for the wrong person. Maybe you’ve paid off a loan, but it just hasn’t been updated in your report yet.
Your report can also suffer as the result of identity theft: Someone else may open up accounts and run up big credit card debts in your name, for example.
The Credit Report Dispute Process
There’s no way to know if there are errors on your report without checking it, so that’s the first step. By law, you are entitled to one free copy of your report from each bureau every year. There are a number of other websites that purport to offer free credit reports, but they’re not part of the federal program and are trying to collect your personal information or rope you into a paid service.
The federal service is called annualcreditreport.com, and they will not send you emails or other types of communication asking for your personal information. If you do get that kind of email, it’s likely a scam.
Once you have your credit report from each bureau, you’ll need to check every detail. Make sure the accounts listed on the report really belong to you and that the information about them is accurate. Make sure that any loan amounts are correct and up-to-date. Make sure that any information pulled from public records is correct.
How To Fix Credit Report Errors
If you find a mistake, you’ll need to report it to the credit bureau in writing. Explain what the error is and include copies of any documents you have that support your claim. For example, you could include a bank statement that shows you made a payment on a certain date. Keep copies of everything you send so that you have a record of your credit report dispute.
The bureau will investigate your credit report dispute, typically within 30 days. It will contact the information provider (the lender, collection agency, court, etc.), which will investigate your claim and report their findings back to the bureau. If the provider finds that there was an error, it must report the error to all three bureaus so all of your reports can be updated with the correct information.
You should also report any mistakes in writing to the information provider. Then, the provider must include a record of that dispute with your information and provide it to the credit bureaus any time it reports on your accounts. If the credit report dispute you filed with the bureaus turns out to be correct, the information provider must update its own records and may not report the wrong information again.
If you win your credit report dispute, the credit bureau must send you a free copy of your corrected report (which doesn’t count as your free yearly copy).
However, not every credit report dispute comes out in favor of the consumer. They may not have enough information or some issue may still be outstanding. If that’s the case, you can ask the bureau to include a record of your dispute in your file. You may have to pay for that service, depending on the bureau’s policies.
Note that if the mistake is due to identity theft, the resolution process may take longer because the investigation is more intensive.
Use A Credit Report Dispute to Keep Your Record Clean
Your credit is important, and you have to be proactive to protect it. Get your free credit reports from each bureau every year and make sure that they have accurate, up-to-date information on your financial history so that you don’t end up paying extra interest or losing opportunities because of a glitch in the system.
You can order them all at once or stagger them over the course of the year so that you get continual updates – it’s up to you!
Most importantly, you should always check your report before you make a major financial move, like taking out a mortgage or auto loan, where your credit report will have a big impact on your ability to get approved and on the interest rate you’re offered. If there’s a mistake, start the credit report dispute process right away to make sure everything’s in ship-shape!
Do you need help disputing an issue on your credit report? Get in touch, we may be able to help.