An ounce of prevention . . .
Identity theft, poor information and human error can result in damage to your credit report. If you can’t prevent it, you can quickly fix it.
Think of it as an annual tune-up of your car or a physical exam. It’s an opportunity to discover and fix small problems before they become big ones. An annual review of your credit report can alert you to inadvertent mistakes and intentional fraud before every creditor out there starts believing you’re a deadbeat. If you find errors on your report, get busy correcting them. It’s a fairly simple process.
Video: How to Dispute Credit Report Errors
The damage a bad report can do
First off, it’s important to know that, if you’ve ever owned a credit card or taken out a loan for a home purchase or a college education, a credit report about you already exists. It is being used now by all present lenders and will be used by potential lenders to determine how much risk you represent as a borrower. An unacceptably low credit rating will either prevent you from obtaining credit or force you to pay outrageously high interest rates on any loan you can secure.
Causes of a harmful report
Sometimes a bad credit rating is exactly what the borrower deserves because of irresponsible behavior. Other times, a bad rating results from circumstances beyond the borrower’s control, such as identity theft. Human error on the part of the borrower, the lender or one of the nationwide consumer reporting companies also comes into play. If you don’t check, you won’t know until your credit cards start being rejected.
Ordering free annual reports
The three nationwide consumer reporting companies are Equifax, Experian and TransUnion, and are required by federal law to provide you with a free copy of your credit reports once every 12 months. You can order your free annual credit reports from each of the three companies by filling out the above form.
How to contest credit report errors
Now, let’s assume you have a copy of your credit report and see something in it that you don’t like. Perhaps it says you have fallen behind in repaying a loan, have been sued or have filed for bankruptcy ... and none of it is true. Each of the three companies is required by law to correct inaccurate or incomplete information. Here are the steps you must take to get the process started:
Call the company or companies to make sure you know exactly where to send a letter.
- Equifax (800) 685-1111
- Experian (888) 397-3742
- TransUnion (800) 916-8800
Prepare a letter.
- State what information you think is inaccurate.
- Enclose a copy of your report or reports with the questionable items circled.
- Include copies of any documents you have that support your contention.
- Request that each specific error be removed or corrected.
- Send your letter by certified mail, “Return receipt requested.”
Keep copies of everything.
Video: Can Credit Repair Companies Do Anything You Can't?
The investigation
The credit reporting company (or companies) must investigate the situation, usually within a month. It must forward all relevant material to the organization where the disputed information originated. Then that organization must review your material and report its findings back to the consumer credit reporting company.
If worse comes to worst
Once all that is done, the reporting company must send you the results of its investigation in writing and, if the dispute results in a correction, a free copy of your revised report. The consumer reporting company also must send you the name, address and phone number of the organization that provided the inaccurate information. If worse comes to worst and all your best efforts don’t solve the problem, request that a statement of the dispute be added to your file. That won’t repair the damage to your credit, but at least it will put you on record as playing the rest of the game under protest.