Do you know how to dispute and correct errors on your credit report?
A significant error on your credit report can tank your credit score and throw your personal finances into a tailspin.
And while you may not have given it much thought, credit report errors actually occur more frequently than you would expect.
As per the Federal Trade Commission, about 25% of credit reports contain potentially significant errors.
This post will cover the most common errors that show up on credit reports and how you can go about correcting them immediately.
Read on to learn how you can easily dispute and correct errors on your credit report.
What is Your Credit Report?
Your credit report is a summary of your history with credit and contains information sent to credit bureaus by lenders and creditors.
There are three major credit bureaus in the United States: Equifax, Experian, and TransUnion. Each bureau operates independently and your credit report may be slightly different for each. This is because lenders and others who report to the credit bureaus are not required to report to all three.
Your credit reports will generally contain four types of information:
- Personal or identifying information such as your name, date of birth, etc.
- Credit accounts, both current and past
- Inquiry information, meaning information about which companies have pulled a copy of your credit report.
- Bankruptcies and collection information.
Your credit report helps lenders decide whether to extend you new credit and at what terms. Landlords and other organizations may also pull credit to determine your level of risk.
Common Errors on Credit Reports
It’s worthwhile to routinely request and review your credit report from all the three major credit bureaus (Equifax, Experian, and TransUnion). You can easily get one free credit report from each of them every 12 months through AnnualCreditReport.com.
Some of the common errors to look for include:
- Wrong personal information: your name, address, phone number, and social security number (SSN) may be misspelled or outdated.
- Wrong account statuses: an account that has been closed may be reported as open. There may be errors relating to your payment history, credit limits and account balances.
- Duplicate accounts or incorrect accounts that are not related to you and which may have resulted from identity theft.
- Negative information such as delinquent payments, bankruptcies or consumer proposals which have exceeded the maximum number of years they can stay on your report. Most negative information should be deleted after 7 years.
Why Credit Report Errors are important
The details on your credit report go into the calculation of your three-digit credit score, which is used by lenders to determine your creditworthiness. A very good to excellent credit score makes it easier for you to qualify for credit facilities (credit cards and loans) at a reasonable interest rate.
If your credit score is poor, either due to credit report errors or because of your poor debt management strategy, most lenders will not approve you for credit, or they may offer you extremely high rates that burn a hole in your pocket.
As such, maintaining a clean credit history is crucial to your financial health.
How to Dispute Errors on your Credit Report
Maintaining at least a moderately good credit score is critical for getting better loan rates and terms, and errors on your credit report may be misrepresenting your credit risk to lenders.
Here are the steps you should follow to dispute and correct errors on your credit report.
Step 1: Gather all the Relevant Documents
This is where the saying by Benjamin Franklin that “by failing to prepare, you are preparing to fail” comes to mind.
The first step in disputing errors on your credit report is to identify what the errors are and gather documentation that supports your dispute claims. These documents could include:
- Bank and credit card statements
- Bankruptcy discharge
- Release letters from debt collection agencies
- Police report relating to identity theft
You must also be prepared to provide identifying information including your full name, past and current addresses, SSN, date of birth, and your employment details.
Step 2: Contact the Credit Bureau
Experian, Equifax, and TransUnion are the major credit bureaus in the United States. If you notice errors on your credit reports from one of these agencies, check the reports provided by the others for accuracy as well. You need to contact each provider individually to submit a dispute if needed.
Send a letter to the credit bureau that clearly states the inaccuracy on your report and provide copies of relevant supporting documents. A sample letter provided by the Consumer Financial Protection Bureau (CFPB) can be found here.
You can also lodge a dispute online or by phone.
Below is the contact information for the three credit reporting agencies:
- Online portal
- Mail to Equifax, P O Box 740256, Atlanta, GA 30374
- Phone: 1-866-349-5191
- Online portal
- Mail to Experian, P O Box 4500, Allen, TX 75013
- Phone: 1-888-397-3742
- Online portal
- Mail to TransUnion, P O Box 2000, Chester, PA 19016
- Phone: 1-800-916-8800
Use certified mail with return receipt when sending documents to the credit bureau so you can confirm that they received it.
Step 3: Contact the Information Provider
You should also be contacting the information provider (such as a lender or debt collection agency) furnishing the credit bureau with information if the error is due to their misreporting.
Similar to the credit bureau, send them a letter (sample letter) that clearly states the error(s) and request that they make the necessary corrections.
Step 4: Allow 30-40 Days for an Investigation
Credit bureaus and information providers must investigate your dispute and get back to you within a month or so. If inaccuracies are confirmed, the credit bureau will update your credit report and provide you with a free copy. You can also request that they notify lenders who have requested your credit report in the past 6 months.
If the credit bureau and information provider deem your credit report to be accurate or they consider your dispute to be frivolous, no changes will be made.
What if your Dispute is Unresolved?
If your credit report error dispute is unsuccessful, you can:
- Ask the credit bureau to include an explanatory statement on your credit report that explains the dispute from your point of view. This statement is provided alongside your credit report to anyone who makes a request for it.
- Lodge a complaint with the Consumer Financial Protection Bureau.
- Hire an attorney to look into the issue.
Disputing errors on your credit report is not a difficult task.
As part of your annual personal finance checklist, request your free credit report and review it for accuracy. If you find any errors, proceed to rectify them as soon as possible so your credit profile can stay healthy.
The loan rates and terms you’re extended may depend on it.