CREDIT CARD HELP: The basic fundamentals of credit cards
All about credit reports and credit scores
6 steps to fix, dispute credit report errors
By Michelle Crouch
If your credit report contains an error, it's on you to get
it fixed -- the sooner, the better. A
serious mistake on your credit report could cost you the next time you buy a
car, make or break your mortgage application or even keep you from getting a
job, cell phone or apartment.
Errors are more common than you might expect. A Federal
Trade Commission study in 2013 found that one in 20 consumers had a meaningful
error on their credit report. Yet many consumers don't even know there's a
problem until they apply for a new line of credit and find themselves rejected.
If that has happened to you, don't panic, experts say. Your
credit isn't doomed , unless, of course, your credit report is showing other
problems, such as loans in default, judgments or other delinquencies. But it
will take patience and persistence to get legitimate matters cleared up. After all, it is the information in your
credit reports which feed the creation of your credit scores, which is what
most lenders use to make their determination on whether or not you are
"Some consumers have heard so much about
how difficult the process can be that they decide they don't even want to deal
with it," says John Ulzheimer, who has been an expert witness in more
than 150 credit-related cases. "That's a mistake, because that
information is being used by lenders, insurance companies and employers every
day to make decisions about you."
Here are the steps you need to take to fix costly credit
report errors so you can get the credit score you deserve:
1. Request your credit
You can get a free credit report once a year from each of the
three major credit bureaus -- Equifax, Experian and TransUnion -- at AnnualCreditReport.com.
(Note: that's the only site where you
can get the reports for free under the law. Many other sites that offer "free"
reports have strings attached.) Financial advisers say it's a good idea to check
your reports at least once a year.
Even if you've already obtained your report for the year, you're
entitled to another free report under the law if you believe your file is
inaccurate because of fraud or if you've been denied credit, insurance or
employment within the past two months.
Make sure you request reports from all three agencies
because they often contain different information, says Ira Rheingold,
executive director National Association of Consumer Advocates.
2. Gather documents to
support your case
If you find a mistake on your report, start
collecting any evidence to prove the information is incorrect. That may mean
hunting down a document that shows you closed an account on a specific date or
finding a canceled check that shows you made a payment listed as delinquent.
Also review your report closely for
misspellings, wrong dates of birth or incorrect addresses that may indicate an
identity mix-up. Because the agencies
have fairly loose matching criteria to allow for data entry error, it's common
for the files of two people with similar names to end up merged, Rheingold
says. "A lot of people think their identity has been stolen, but often it's the
credit bureau mistakenly merging files," he says. "All they need to have is
seven of the nine digits of your Social Security number and a similar name."
a clear, comprehensive dispute letter
You can start with this
sample letter from the FTC, but if possible, include
even more information. Clearly identify each item in your report that
you dispute, explain why you dispute the information, cite any attached
supporting documents and request that the item either be removed or corrected.
"Disputes need to be
specific," says Rod Griffin, director of public education for Experian. "For
example, it's important to state ‘the account is not mine,' or ‘the account
payment was never late,' or "the account
Bennett, a consumer lawyer in
Newport News, Va., who
helps clients get credit errors fixed, recommends including a
copy of your credit report, with every error highlighted and circled, along
with copies of all supporting documentation He also suggests having your letter notarized,
and providing a
copy of your driver's license and a utility bill as proof of your identity.
"Very often the bureaus will reject a dispute simply because they conclude that
they need more identification," Bennett says.
the online complaint form
You may be tempted to use the bureau's convenient
online dispute form, but experts say that's not a good idea. The online form
requires you to choose from a list of specific problems that may not fit your
scenario, allows only a limited amount of space for explanation and typically
receive less attention than a written complaint. "In nearly all
instances, online disputes are handled only by a computer and without human
review," Bennett says.
addition, if you send your letter by certified mail, return receipt requested,
you can prove it was sent and received.
If the error shows up on the reports of
all three credit bureaus, Ulzheimer and Rheingold recommend sending a separate
complaint to each one, even though they are supposed to inform each other of
any errors that they find. //
The reporting bureaus are also obligated
by law to forward your information and complaint to the bank or debt collector
that reported the debt (often called "the furnisher"), which is required to do
its own investigation.
Until recently, the bureaus simply had workers read your letter and boil it down into
a two- to three-digit computer code and a short summary of your complaint, and
forward that to the furnisher. They now have a new system that allows them to
forward your full complaint letter and documentation as attachments, but experts
say it's still a good idea to send a fourth copy of your complaint to the furnisher
yourself to get their attention and make sure they see everything.
5. Keep a paper trail and
wait for a response
Under the Fair Credit Reporting Act, the bureaus are
required to investigate claims of error. But how thoroughly they investigate is
unclear. "We've seen a lot of reports that they spend 3 to 5 minutes per
dispute," Rheingold says. "They have this automated system where you send in a dispute,
it's turned into a computer code, sent to the furnisher and then it gets sort of
parroted back to you in a denial, and nothing is really investigated or solved."
The law gives the bureaus between 30
and 45 days to respond, but because the process is so automated, most consumers
hear back within a few weeks.
Meantime, make sure you hold onto your paperwork and keep it
organized. "If you do end up having to go to court, you need to be well
documented," Ulzheimer says. "Create a file, keep copies of all of your
supporting documents and of all correspondence to and from each bureau."
If the bureau makes a correction to your report as a result
of their investigation, they should send you a free copy of your new, corrected
report. You can also ask the bureau to send notices of the correction to any
company that received your report in the last six months.
6. What to do if your complaint is denied
If your request for a correction was turned down, you still
have options. You have the right by law to file a 100-word
written statement of dispute that will be included with your credit report, so anyone who accesses your report can read your side of the story.
You can also file a complaint with your state attorney general's
office and with the Consumer Financial Protection Bureau (CFPB).
"That can be helpful because the CFPB has regulatory authority over the
reporting bureaus, and the fines they've leveled against other companies have been
colossal," Ulzheimer says. "The agencies have no interest being on
the wrong end of a CFPB fine. So it's like bringing your bigger, stronger
brother to the fight."
If it's a serious error, you may want
to consider hiring an attorney to take your case. (Find a lawyer experienced in
this type of case at the National Association
of Consumer Advocates.) Keep in mind that under the law, you
must file an official complaint with the credit bureaus before you can take
Most lawyers take these cases on
contingency, so it shouldn't cost you anything. In some cases, the damages can
be huge. One jury awarded an Oregon woman $18 million for an error a credit
bureau wouldn't fix despite two years of complaints. A judge later reduced that
amount to $1.62 million. "Keep in mind that most of these cases settle out of
court for a small amount of money," Ulzheimer says, "but for most people,
that's ok. What you really want, after all, is to get your report corrected."
See related: 5 mistakes people make when disputing credit report errors
CREDIT CARD HELP: The basic fundamentals of credit cards