When errors appear on your credit report, they can have serious financial consequences. Negative credit errors have the potential to damage your credit score. And if your credit score drops – by mistake or other cause – it could cost you.
ONE bad credit score can make it difficult to qualify for financial products like credit cards, mortgages, and auto loans. If you find lenders willing to work with you despite a low credit score, chances are you will pay higher interest rates and fees when you borrow money.
Therefore, action is crucial if you discover errors on your credit report. And if you haven’t checked your credit reports recently to confirm they’re accurate, it’s important that you get in the habit of doing so regularly.
The guide below will guide you through common credit errors that you might spot on your credit report. You’ll also find four simple steps you can take if you need to fix your own credit.
Check your credit report
The best way to ensure that your credit reports contain accurate information is to review your credit information from three major credit bureaus — Equifax, TransUnion and Experian. Thanks to a 2003 amendment to the FCRA known as the Fair and Accurate Credit Transactions Act or FACTA, you have access to a free copy of each of your consumer credit reports every 12 months.
Visit AnnualCreditReport.com to access your free credit reports. By the end of 2023, credit bureaus will offer consumers free weekly access to their credit reports.
Related: How to check your credit score for free
Record any errors you find
After you download your credit reports, you should review all three of them in detail. Take note of any inaccurate information you discover on your credit report so you can decide if you want to dispute it later.
Some credit report errors can be more worrisome than others. You should be especially wary of any errors that may indicate that you may be the victim of identity theft or the credit bureau may have inadvertently mixed your credit information with someone else’s.
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Here are some common credit report errors to look out for as you review your reports:
- Incorrect identifying information (for example, name, address, old address, date of birth, or Social Security number).
- The account does not belong to you.
- Invalid account number.
- Copy account.
- Payment status is incorrect.
- Incorrect account balance or credit limit.
- Negative items are out of date (e.g. payment more than seven years late).
Related: Everything you need to know about credit freezing
Prepare a letter of dispute
Once you identify the errors you want to dispute, prepare a letter to send to the appropriate credit bureau. If there are errors on more than one of your credit reports, you will need to send the dispute to each credit bureau.
Make sure each dispute letter you write identifies the incorrect credit entries you want the credit bureau to investigate (along with their account number). You should also state why you disagree with the information on your credit report.
You can find free dispute letter samples online from both Federal Trade Commission and Consumer Financial Protection Bureau (CFPB). You can also file a dispute online through each credit bureau’s website.
However, many experts, including National Consumer Law Center, recommend not to use online dispute. Sending a certified dispute letter to a credit bureau instead of submitting a dispute online can help you avoid limiting your dispute options to pre-filled options, missing documentation, and potential problems. other.
Waiting for response
After you mail the dispute, the credit bureau has 30 days (or 45 days in certain cases) to investigate your dispute. Once the investigation is complete, the credit bureau will contact you with the results.
Here are the most common potential outcomes you may experience after a credit dispute:
- erase: The credit bureau removes the item you dispute from your credit report. It no longer has any impact on your credit history or credit score.
- Update: Credit bureaus update the item you dispute on your credit report. The item’s future impact on your credit score will depend on the changed information on your credit report.
- Verification: The credit bureau did not remove or change the item you dispute because the data provider (the company that reported the account in the first place) verified the item as correct.
If you disagree with the credit dispute outcome, you can try submitting a follow-up request for further investigation. However, you can also consider escalation issues and file a complaint with the CFPB (including proof that you submitted the dispute but did not fix the problem).
bottom line
Credit errors can wreak havoc on your financial life, making it difficult for you to qualify for the best credit cards, loans, and other financial products. Therefore, it is important to monitor your credit reports to ensure accuracy and take action if credit errors occur to you. You have rights under the Fair Credit Reporting Act (FCRA), but you must exercise them and protect yourself.
