According to a CNN Money article, a recent study by the FTC reported that 42 million Americans may have some error on their credit report. As many as 5% of all reports may have errors serious enough to cause them to have credit denied.
Check your credit report
So what can you do about it? First it is very important that you periodically obtain a copy of your credit report to review the accuracy of what is found there. Any one is entitled to receive a copy of their credit report from each of the reporting agencies once per year. You may also request a copy of your credit report if you have been denied credit, insurance, or employment due to issues on your report, provided you make the request within 60 days. Additionally, you may request a copy if you are unemployed and plan to look for work within the next 60 days.
If you find errors on your report, you do have options.
The first step is you need to notify the credit reporting agency that you believe there is an error on your report. Each of the three agencies, TransUnion, Experian, and Equifax maintain completely independent reports. Therefore there could be an error on one, two or all three reports. You need to contact the agency whose report has the error.
You need to contact the agency in writing. Include a letter clearly identifying what specific item you are disputing. Include copies (not your originals) of any supporting evidence you may have that the item is inaccurate. Ask that the item be removed or corrected. You must send this certified mail, return receipt requested. That way you have proof that your letter was delivered and when.
The credit bureau’s responsibility
Once your letter has been received the agency must contact the company that reported the item. For example if you are disputing a credit card entry, then the agency would be required to contact the bank that reported the credit card information.
At that point, the bank or other creditor has 30 days to respond. If they do not respond or if they agree the entry is inaccurate then the credit bureau is required by law to remove the item from your report. They must also provide you with a copy of your corrected report. You may also request they send a copy of the corrected report to anyone who has requested a copy in the last six months as well as an employer that has requested your report in the last two years.
Follow-up with the creditor
You should also follow up with the creditor that reported the information. Send them the same documentation and request that they remove the inaccurate records from their systems.
The problem is if the creditor does not remove your inaccurate item, you might find that it reappears months or years later. This is not supposed to happen but when you are looking at millions of records sometimes mistakes happen and sometimes creditors can just be a little sloppy with their record keeping.
What if the creditor affirms the disputed record
If the creditor responds to the agency within the 30 days and provides evidence that they believe the item is accurate, then the credit bureau will not remove the item. At this point you will need to work with the creditor to convince them to remove the item.
If you are unable to convince the creditor to remove the item, you do have the option to file a dispute with the credit bureau that will be attached to your report. This does not remove the item, but does enable you to tell your side of the story to anyone that may check your credit report in the future.
Remember in either case the credit bureau are just reporting the data that is given them by the creditor. It is not their fault if there are inaccurate items.
Disputing accurate items
Lastly, you could employ this strategy on negative items that are in fact accurate. It is possible the accurate item may be removed if the creditor is sloppy and fails to respond. This is actually the tactic used by some disreputable companies that promise to “fix” your bad credit score.
Do not do this. This is dishonest and shows a lack of integrity. The only honest way to have a correct item removed is to simply wait. Eventually it will drop off your report. Even while it is on the report it will carry less weight the older the item becomes.
Your credit report is your responsibility
Ultimately verifying the information on your report is your responsibility. Personally, I hate the fact that credit reports carry the weight in our society that they do. They do not reflect a healthy financial condition, they simply reflect that you are good at borrowing money and paying it back.
Despite that, your credit score can affect many areas of your life. Make sure that you don’t run into problems due to inaccurate items. Monitor your report periodically. If you find mistakes, make sure they are corrected.
For a more information on correcting errors you can go to: http://www.consumer.ftc.gov/articles/0151-disputing-errors-credit-reports