You should take immediate remedial measures if you find an error in your credit report. When left unattended, errors in credit reports can adversely affect your credit score. Unfortunately, these mistakes aren’t as rare as one would hope. A study by The Federal Trade Commission found that at least 25% of financial service consumers have errors in their credit reports.
It also found that reference bureaus corrected 20% of the errors that clients disputed. You need to question any errors the right way if CRBs will rectify them.
The following are the steps you need to take to dispute your credit report properly.
Step 1: Study all the Credit Reports Available
Sometimes financial institutions don’t all give their credit reports to the same CRBs. You should, therefore, not base your decision on whether or not you need to dispute a single report. It may also be that one CRB made the mistake which shouldn’t be too complicated to resolve.
Every major CRB is obligated to give you a free credit report every week; these bureaus include TransUnion, Experian, and Equifax. Check for negative information in each report individually and file a dispute where necessary.
Some errors in your report are minor and don’t warrant a dispute. They include outdated contact information or a misspelled word. You could also find that you have a disputable negative report due to a payment you accidentally missed.
You should take up the issue of an accidentally missed payment with the creditor. Inform them that you forgot to pay and then proceed to make the payment. Your creditors should have no problem updating your record based on your pattern of prompt payments in other installments.
Errors are particularly critical when they appear in more than one of the three credit reports. Some of them are more damaging than others in the long run, and these are the ones you should look out for.
These errors include having time-barred negative information still appearing on your report. Any negative reports should be expunged from your record after seven years.
Other damaging errors are the ones suggesting the possibility of identity theft. If, for example, a default by a divorced spouse occurs as part of your credit information, they could have used your details to secure funding. You should dispute this to ensure the record is set right.
Finding accounts, you don’t know being listed in your credit report is another red flag that you should dispute to see if the information is included erroneously. The other one is the inclusion of addresses where you have never lived in the reports.
Step 2: Prepare your Defense
Credit Reporting Bureaus handle a lot of information, and you should make it easy for them when appealing a misreporting. The best way to do this is to give them everything they need to correct errors the first time. Incomplete information will only prolong the process as the bureau sends you requests for more information and so on.
The documents to attach to your request depend on the nature of the dispute, but the following list should cover most of what you need.
- Copies of statements from your banks to show that you made the disputed payments if the issue pertains to a loan, you had taken
- Birth certificates, death certificates, and evidence of finalized divorce as the dispute may demand
- Documents providing information on the loan and credit card statements
- A copy of the police report where identity theft is suspected helps if you reported suspected identity theft before noticing errors in your credit report. Many people, however, don’t realize their identity has been stolen until there are errors in their credit reports. Report to the authorities immediately you find evidence of identity theft in your credit report and attach the report as part of your dispute.
- Identification document such as a driving license
- Social security number
- Your address and previous addresses for the past two years
- Other documents that bear your identity, such as utility bills, insurance documents, etc.
Step 3: Register Your Dispute
There are two ways of registering your dispute; calling or writing a letter. A telephone call will get your complaint acknowledged, but you can’t complete the process via phone because you have to send supporting documents. By sending the supporting documents certified mail, you can create a paper trail that you can prove at a later date.
The second method is by writing a letter and mailing your supporting documents alongside it to the CRBs. Each of the three main reporting bureaus has made its contact information easily accessible.
The institution that gave you a negative report is known as the furnisher. It could be a bank, a car dealership, a credit card company, or any such body. Write to them and inform them about your dispute with the reference bureau and indicate the dispute’s reference number. Communication to the furnisher may cause them to stop sending the disputed, negative information until the matter is resolved.
Step 4: Escalate the Matter to Consumer Financial Protection Bureau
The law obligates the CRBs to investigate and respond in writing to any dispute within 30 days. If the bureau admits that the negative report was erroneous, they should update your credit reports accordingly and send you the correct copy.
You can then request the bureau to send the updated information to anyone who had received the erroneous information in the last six months.
The other possibility is the reference bureau or the furnisher insisting that the negative information is accurate. You can allow it to rest if you were mistaken in your dispute or report the matter to CFPB.
You will need to attach the same information you had attached to the CRB and explain why you feel the CRBs decision wasn’t right. Upload your dispute information on the CFPB website and follow the progress of your dispute on their website.
Angela Kovacs of Van Buren Township, Michigan is the founder and CEO of Credit Repair Gal. A credit restoration firm in Michigan.