An Error on Your Credit Report

The Truth about Credit Reporting

You probably know you can get a free copy of your credit report once a year. But when is the last time you did that? When’s the last time you looked at what’s on your credit report?

A new report from the Federal Trade Commission agency found that one in four people had an error on their credit report.  The study further found that five percent of those people had errors that were significant enough to cause the borrower to pay more for mortgages, auto loans and other financial products.

Yikes. That’s bad. Even though I’m not in need of any loans right now, I think I better check my credit report. I don’t want to find any erroneous material on it that would block me from getting a loan or the best rates available.  I suggest you do the same.

Your credit report not only contains information about what loans you currently have and how much you owe on each of your credit cards, but also about where you live, how you pay your bills, whether you’ve ever been sued, your arrest record and if you’ve ever filed for bankruptcy before. Companies everywhere pay these credit reporting agencies for copies of your credit report to evaluate your requests for credit, insurance, apartment rental, even a job.

Your credit report is made up of three individual reports that get averaged out to one credit score. Experian, Transunion and Equifax are the three nationwide agencies that collect data on you. When you get a copy of your credit report, you’ll receive information that details your financial history and a credit score from each of these three agencies.

Your credit score is made by averaging out these three scores. One or all three of these agencies could have an error about your credit history on their report which would affect your overall score. You don’t want this to happen!

Information contained on your credit report doesn’t go away on its own, well at least not for a very long time. Your credit report can have details about your credit history going back seven years and up to ten years if you’ve ever filed for bankruptcy. So that credit card you got in college and paid late every month and ran up a huge, insurmountable balance on can still affect your well into your 30’s.

Other information contained on your credit report has no expiration date. There is no time limit on reporting for information about criminal convictions, employment (especially in the case where a job pays more than $75,000 per year) and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.

You can see now the importance of verifying everything that’s on your credit report. But what do you do if you find an error on your credit report? You get to work on correcting the information immediately.

To dispute incorrect information within your credit report, contact the agency by phone, email or through the mail. First figure out which of the three credit reporting agencies (Experian, Transunion, or Equifax) claims the inaccurate information.

Each of the three credit reporting agencies have pages on their websites that you can dispute a claim or begin the correction process. Once there you’ll have to tell the company what specific information is inaccurate. You’ll likely need to tell them your address, social security number and the report number listed on the credit report by that particular agency.

You’ll also need to include documentation showing the credit agency is publishing inaccurate information about you. That means you’ll need to contact the merchant or company involved in the dispute. If your credit report states you have an unpaid balance on a credit card and you know that is untrue, then you’ll need to include current statements that show your balance is paid in full. If you don’t have statements that can show that, then you’ll need to contact the credit card company involved for those.

When you provide the credit reporting agency this information and documentation, you’re going to need to explain why you are disputing the information. Write a few sentences that describe how the information is inaccurate. You don’t want these companies to try to figure out what’s wrong. You need to be very detailed, but to the point.

You must also ask that they remove or correct the information. I’ve written a sample email or letter to demonstrate what you should say.

Dear Sir or Madam,

My name is {insert your name here}. I live at {insert your full address here}.  I am writing to dispute a claim on my credit report file from your company.

The claim I am disputing is {identify item(s) disputed by the name of the company, such as the credit card company name or name of the creditor, and the type of item, such as credit account or loan}.  It is {inaccurate or incomplete} because {describe why the information is false, such as account has been closed or the balance has been paid off}. As per my request, please remove the item from my file immediately.

Enclosed are copies of {describe any documentation you are sending along with the letter} to back up my claim. Please look into this immediately and delete the disputed item as soon as possible.

Sincerely,
Your Name

If you are sending this via the mail, be sure to send it by certified mail with a return receipt requested. This way you’ll have documentation that the credit reporting agency received your letter and dispute claim.

By law, these agencies have 30 days to investigate your claims. They are required to forward all relevant data you provide about the inaccuracy to the company that originally provided the information to them. Then that company will do their own due diligence and report its findings back to the credit agency. If the information you are disputing is found to be inaccurate like you claim, then all three credit reporting companies will be contacted so they can correct the information in your file.

Once the investigation is complete, the credit reporting agency is required to send you the results in writing, along with a free copy of your credit report showing the information has been changed. If you ask, the credit reporting company must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

You can also go straight to the source to dispute claims on your credit report. Contact the company or lender that reported the erroneous information to the credit reporting agency. You’ll need to ask them to look into the matter and send information to each of the three credit reporting agencies with the corrected information.

If you run into trouble with any of the credit reporting agencies contact the Consumer Financial Protection Bureau. This bureau is the federal agency that oversees the credit reporting industry. They have the authority to make these agencies comply and resolve disputes in a timely manner. If you file a complaint with the CFPB, the credit reporting agency has 15 days to respond to the complaint with an action plan.

At the worst if you can’t get the credit agency to overturn the disputed claim you can request that they include your statement of dispute in your file and in future reports. This will ensure that anytime a creditor runs your credit report a record of your dispute and your explanation will accompany it.

Also, don’t fall for any company that claims they can repair your credit for you. They can’t do anything you can’t do yourself. They are simply a waste of money.

The good news is that this same report by the Federal Trade Commission that found that many people’s credit report contains errors, also found that 206 out of 262 consumers who filed a dispute had some type of change made to their credit report.

The first step to getting any errors fixed is to get a copy of your credit report. If you haven’t requested a copy in the last 12 months, you can get a copy for free by going to www.annualcreditreport.com or by calling 1-877-322-8228 or by completing the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.

Good luck!

Keeping Money in Your Pocket,

Nancy Patterson

 
 
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