Many people find out they have errors on their credit report. Millions of people in America have errors on their credit report each year. These can include outdated information such as old balances. It could also be an account that you do not own. The Federal Trade Commission (FTC) estimates that one in five people will see an error on their credit report. This means that errors on credit reports are common. Even though errors on your credit report may be minor, there can be consequences. These consequences can be significant. Errors on your credit report can cost you thousands of dollars in interest or even keep you from getting a loan.
Fortunately, there are some protections for consumers regarding their credit reports. If you go through the process correctly, disputing errors on your credit report could save you money, preserve your credit history and may provide better loan terms. Follow the directions as shown below to make sure all information on your credit report is accurate.
Step one: Get your credit reports
Before disputing anything you will need to know what is appearing on your reports. The three primary credit reporting agencies – Experian, TransUnion, and Equifax, are all mandated to provide you with a free credit report at least once per year. All three can be accessed via AnnualCreditReport.com, which is the only website authorized by the federal government to provide free credit reports. Avoid using any website that claims to offer you a free credit report as they typically require a paid subscription.
Obtain your reports from all three reporting agencies. Errors in one agency do not automatically show up on another. However, the same error may be reported by multiple agencies based on how the information was provided.
Step two: Identify the error clearly
Review all three of your credit reports for errors in detail. Compare these reports to the records you have. Common errors include: accounts you do not recognize, incorrect late payments, duplicate accounts, accounts of a person with a similar last name, incorrect personal information (wrong address, wrong birthdate), accounts that should be removed due to the seven-year reporting period or statute of limitations.
When you find an error, clearly document it. Take note of the exact account number on the report, the credit bureau that has the account listed, and specifically what is incorrect. Be as accurate as possible. Bureaus will disregard vague complaints. However, if you can clearly explain and document the issue they will need to respond.
Step three: Gather your evidence
Evidence is needed to support a dispute. Without documentation to support your claim, a reporting agency may easily dismiss your dispute. Before filing your dispute, collect evidence to support your claim.
For example, if there is a late payment on your account and you believe you made timely payments, obtain documentation to support your claim. Pull your banking statements or confirmation from the lender for the months during which the alleged late payments occurred. If an account does not belong to you, clearly state this and document any evidence that supports your identification. If an account is past the statute of limitations in your state or past the seven years accounts are allowed to be reported, note the date it should have been removed.
The better your documentation, the less likely the reporting agency will dismiss your claim simply based on the claim of the creditor.
Step four: File your dispute
You can submit your dispute in several ways: online, by phone, and by mail. Submitting your dispute online is usually faster than mailing your dispute. However, there are some benefits to mailing your dispute. When you mail your dispute you can control how your dispute is received and you also create a paper trail of your communications.
Each reporting agency has its own method for handling disputes. You can file your dispute at Experian.com, TransUnion.com, and Equifax.com. Although there is only one error, if that error is listed on all three reports, you must file a dispute with each agency separately. These three credit bureaus do not have a system to share disputes.
You need to file a dispute that is clear about the reason you believe there is an error on the report, how you know it is an error, and what you think is the right information. Include copies of documents supporting your dispute. Retain original copies for yourself.
You can also dispute the incorrect information directly with the company that provided the inaccurate information. These companies are called “data furnishers.” Under the Fair Credit Reporting Act (FCRA), data furnishers are obligated to investigate disputes and correct incorrect information.
Step five: Wait and follow up
After you file a dispute, each reporting agency has 30 days to conduct an investigation into your dispute. They will contact the data furnisher regarding the disputed information, who must review the information and respond. If the data furnisher cannot verify the information, the information must be removed or corrected.
You will be sent a written notification stating the results of the dispute. If the dispute was resolved in your favor, the reporting agency will provide you with a free updated version of your report.
If the dispute was denied, and you still believe there are errors in your report, you have several options. You can add a statement explaining the disputed item to your credit report. This does not remove the entry from your report, but you can add your own explanation of the disputed item, and the lender will see both entries. You can also re-file your dispute with further evidence, submit a complaint to the Consumer Financial Protection Bureau (CFPB) at ConsumerFinance.gov, or seek assistance from a consumer law attorney, many of which work on credit disputes on a contingency fee basis.
Common mistakes that kill disputes
Filing a blanket dispute of multiple errors at the same time is one of the most common mistakes consumers make. Reporting agencies view blanket disputes as a form of credit repair rather than a legitimate dispute. Reporting agencies are more likely to consider a dispute serious when it specifically relates to a particular issue and is supported by sufficient documentation. A blanket dispute of ten errors looks like a credit repair scheme, not a valid claim. Therefore, a blanket dispute may be considered frivolous.
Another mistake that is commonly made is failing to keep a copy of all documents. If your dispute is denied and you wish to appeal, your collection of documents will be essential to proving your case.
Filing a dispute regarding legitimate negative information is a complete waste of time. Negative information such as late payments cannot be removed from a credit report simply because you request it. Only focus on errors.
How Credit Genius can help
Credit Genius members have the advantage of using real-time Experian credit monitoring. Real-time Experian credit monitoring alerts you to any changes made to your Experian credit file. Using this monitoring is especially beneficial when trying to catch errors early. The sooner you find an error, the less harm it will cause, and the smoother the dispute process will generally be.
Understanding what is included on your credit report is the key to managing your credit. You cannot resolve issues that you do not know exist.
The bottom line
Credit report errors occur frequently, and they are consequential. However, errors on a credit report are fixable. While the process may require some time and documentation, it is not overly complex. The provisions contained in the Fair Credit Reporting Act are real and enforceable. Use them.
Do not ignore anything on your credit report that you believe is incorrect. Errors will not disappear. File a dispute, contact the credit reporting agency, and document all actions taken. Correcting errors in your credit report can significantly boost your credit score (which opens up more positive financial options).
