According to a report by the United States Federal Trade Commission, one out of five Americans has experienced errors in their credit reports (at least once). Credit report errors drag your score down hence making you less creditworthy. It is important, therefore, that you know how to fix these errors in order to improve your credit score.
The most common types of credit report errors are:
- Personal details error
These are errors relating to incorrect or misspelled names, wrong addresses, or contact details. Credit bureaus can confuse your address with another client if you fail to update your personal details, especially, when you change locations.
- Mistaken accounts
Mistaken accounts could be due to identity theft or clerical errors. When another client shares your name, you might find accounts that are linked to you without your knowledge. Another reason could be due to identity theft where a person deliberately uses your name to open multiple accounts. For this reason, it is important to ensure that you audit all accounts that are listed on your credit report regularly.
- Errors on your credit reports
These are errors related to inaccuracies such as wrong entries for payment dates and missed payments. The most common errors in your report include:
- Timely report payments that are entered as missed/late
- Active accounts reported as closed
- Incorrect credit limit
- Incorrect credit balance
How to fix credit report errors
While it is true to say that the information provider and the credit-reporting agency are responsible in fixing and correcting inaccurate information, the greatest responsibility lies with you. Here are the steps you should take while disputing credit report errors:
1) Access/request copies of your credit reports
According to the Fair Credit-Reporting Act, you are entitled to a free copy of your credit report from the three nationwide bureaus once every 12 months. To order the free report, visit annualreport.com and complete the annual credit request report form. You can order the three of them at the same time or each at a time.
To receive the report, you will be required to provide your name, social security number, address, and date of birth. To secure your file and prevent imposters from accessing this information, you will need to answer personalized questions that only you would know. If you order the report online, it will be sent to you immediately. If you order via the toll free number, however, it will take 15 days.
Additionally, you are also eligible for a free report when a company takes an adverse action against you. This includes failure to approve your application for credit and insurance. In this case, you should request for a free report within 60 days of receiving the notice. Apart from the above cases, receiving another copy of your credit report within 12 months could cost you some money.
2) Identify the errors in your credit report
Once you receive a copy from all the three credit-reporting companies, go through the reports keenly and note down all the errors. Some of the errors to check out for include:
- Fraudulent accounts or transactions
Check out for unknown accounts or transactions under your name.
- Duplication errors
This includes having the same debt listed more than once; it could be under different creditors or names.
- Balance errors
Check out for incorrect credit limits or credit balance.
- Identity errors
Mistakes with your personal information: that is name, address, social security number, or your contact details. Also, check out for mix-ups in case you share a name with another consumer
- Account errors
Check whether you are listed as an authorized user when you are the owner or vice versa. Incorrect dates of last payment should also raise a flag.
3) Confirm and write a dispute letter to the credit bureau
After identifying and confirming the inaccuracies, write to the credit reporting company specifying the information that you think is inaccurate. The credit reporting company will investigate the items in question within 30 days. It will also send all this information to the information provider. The organization will also carry out an investigation to verify the given data. If it is inaccurate, all the three credit-reporting companies will be notified to correct the information
When the investigation results to a change, you are eligible for a free copy of your credit report and the written results.
The other option is to inform the creditor in writing about the inaccurate information. The creditor will report the information to the credit reporting company, and if it is incorrect, the information provider will not report it again.
4) Follow up on your dispute
Usually, it takes up to 30 days to investigate disputed information. Ensure you do a follow up. In cases where the credit reporting company fails to correct the information, you can request the disputed statement to be included in your file.
You can also ask the information provider to send this statement to anyone who received your report in the past and those who will receive it in future. Note, however, that the information provider will charge you a fee for this.
Fixing errors in your credit report is important since it directly affects your credit score. Although the credit bureau and the information providers are responsible for most of the errors, it is up to you to file a dispute in most cases so that these companies can take action. In order to dispute the errors before they affect your credit score, always ensure you go through your credit reports once in every 12 months. This way you will identify any errors and work on them immediately before they start compromising your creditworthiness.