There are all sorts of errors that can sneak onto your credit reports — an account that’s not even yours, a “late payment” that was actually made on time, a paid debt that’s still listed as in collections.
This can spell trouble. Your credit reports are used to calculate your all-important credit score, which determines your access to loans, credit cards, apartments and even jobs.
According to an FTC study from last year, one in 20 people have substantial credit report errors — enough to result in at least a 25-point credit score jump once fixed. That’s nothing to sneeze at.
Errors can land on your report when lenders, banks or credit bureaus get it wrong. Nevertheless, it’s your responsibility to get them fixed. “Credit reporting agencies don’t have an obligation to correct anything on a credit report unless you tell them it’s wrong,” says John Ulzheimer, a credit expert at CreditSesame.com.
The only way to know about mistakes on your credit reports is to check them regularly. Go to annualcreditreport.com and request your three reports, one from each of the big credit reporting agencies: Experian, TransUnion and Equifax. This is the only place to get them free, once per year.
As soon as you have your reports, scan thoroughly for errors. A slightly misspelled address or variation of your name is minor; get it fixed but don’t fret too much. More serious mistakes include accounts that don’t belong to you, collections that aren’t yours, late payments that weren’t late and loan inquiries you didn’t authorize.
If you’ve found something you believe to be truly inaccurate (rather than regrettable), file a dispute. If the same mistake occurs in more than one report, you’ll need to file a dispute with each credit bureau. Fair? Nope. But the onus is on you.
Here are some best practices to keep in mind:
Consider snail mail. Filing your dispute online is the quickest option — and earlier this year, credit bureaus started allowing you to upload documents that help explain your dispute. This is an improvement. But experts say a mailed letter might still be the best way to go. The online form can be rigid (like a dropdown list of reasons for a dispute), says Ulzheimer, plus you may find yourself accepting legal language you don’t want to.
Fill out the right forms. The FTC has a sample letter you can use to explain your dispute. Equifax and TransUnion also require you to submit their dispute form with your letter.
Explain yourself. “Be crystal clear” about what you’re disputing, says Ulzehimer. Don’t just say something is wrong, but lay out the facts of what is wrong and why. Include an itemized list if there are multiple issues. “You have to write it assuming the person reading it doesn’t know anything about you,” he says.
Provide proof. This is your chance to substantiate your claim however you can and prove that you’re right about the error. Chase down any and all paperwork that could be helpful: payment records, court documents, identification, letters. For instance, if a loan payment is listed as late on your report, but you have a monthly statement from the servicer showing that it was made on time, include a copy (never the original) with your dispute. Circle or highlight the relevant information.
Document everything. Before you send in your dispute, make copies. Record any conversations you have with credit bureaus, banks or lenders too. This creates a paper trail in case you decide to take legal action later.
Put it in the mail. Check the credit bureau’s site for additional instructions and mailing addresses. Send disputes through certified mail and request a return receipt to confirm delivery.
Give yourself enough time. The credit bureau must look into your claim and issue a response, but it could take up to 45 days to hear back. While chances are it will be much quicker, says Ulzheimer, you don’t want to wait until right before you’re applying for a mortgage or car loan to get things straightened out.
When you do hear back from the credit bureau, the response will let you know if the item under dispute has been deleted, fixed or remains the same. This essentially boils down to whether or not the bank or lender agrees with you — see, the credit bureau forwards them everything you sent and asks them to accept or deny the requested change. What they say typically goes.
If you’re having a hard time getting something fixed, it might be because:
Your dispute lacked proof or a sufficient explanation. If this is the case and you think you can present a stronger case, go ahead and file another dispute. There’s no limit to how many times you can file — but if you start bombarding them with the same exact dispute that they’ve already turned down, legally they can deem it “frivolous” and start ignoring you.
The bank or lender disagrees with you. Let’s say you’re disputing an account you don’t recognize. If the bank agrees that the account doesn’t belong to you, they’ll ask the bureau to delete it off your report. But if the bank believes that the account is yours, it will probably stay on your report.
Your account has been mixed up with someone else’s. If you’re disputing accounts or debts that don’t belong to you, your file could be mixed with someone else’s, perhaps because of a similar name and address or social security number. This is a different ball game. The lender can’t clear things up because it’s usually the credit bureau’s fault, says Ulzheimer, noting that mistakes happen when their automated system attempts to match millions of pieces of information with the right credit files. Even if you get strange info deleted at one point, it may continue to crop up. Alternatively, if you think the errors signal identity theft, contact the credit bureau right away and ask them to put a fraud alert on your file to limit further damage.
While you should always start with a dispute to the credit bureau (this is a prerequisite in case you decide to take legal action), there are other steps you can take. For instance, you can send a dispute directly to the bank or lender that got the info wrong in the first place. Use this sample letter and include all the same documentation. If they agree with your dispute, they have to send a correction to the credit bureaus.
You can also file a complaint with the Consumer Financial Protection Bureau. This info gets passed onto the credit bureau, which must respond to both you and the CFPB. Since credit bureaus are regulated by the CFPB, they may be incentivized to quickly fix the problem.
Worst comes to worst, if you’re not getting errors fixed, hire a lawyer who specializes in the Fair Credit Reporting Act and sue the credit bureau and lender. Since this is can be costly, first consider the impact the mistakes have had on your financial life, like your ability to get a job, mortgage or credit. If you aren’t applying for credit anytime soon, remember that bad info usually comes off your report after seven years.