How To Dispute Errors On Your Credit Report
You've probably heard of "sticker shock," but what about credit rejection shock?
This is what can happen when you apply for a new line of credit - a new airline miles credit card, or maybe even a mortgage - only to find yourself rejected for reasons you can't understand. Worse, when you get a good look at your credit report, you find there are entries you don't even recognize, let alone agree with.
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How can you correct something that's been listed on your permanent record by one (or all) of these huge credit bureaus? Does this mean your credit is forever doomed? For starters, there's no need to panic, or fly into a rage. Unfortunately mistakes on credit reporting are not all that uncommon. And even though it's a pain in the neck, there are steps you can take to redress the situation. It's most important to stay persistent, and document the process. (To learn more about credit reports, see Consumer Credit Report: What's On It and The Importance Of Your Credit Rating.)
Know What You're Up Against
Get a copy of your credit report from all three leading agencies. You can do this online or by phone from each of the big services: TransUnion, Equifax and Experian. Each credit report is broken into several sections, including a section covering your personal information, credit report requests, accounts in good standing, credit items and potentially negative items. (To keep reading about this subject, see Check Your Credit Report and Five Keys To Unlocking A Better Credit Score.)
Analyze each of the three reports thoroughly and determine the accuracy of all of the information they contain. A lot of what is on the report should be known to you, such as a loan you took out; what you are looking for is errors. Make a list of any items you think are questionable, negative or clearly errors. (Also note any discrepancies among the three credit reports). This will give a starting point on resolving issues and potentially improving your credit rating.
Document and Dispute
If you find genuine mistakes on your report, there are several steps that should be taken to resolve them.
Under the Fair Credit Reporting Act (FCRA), the credit reporting agencies are responsible for correcting inaccuracies and incomplete information on credit reports. This allows you the freedom (and responsibility) to contact the reporting agencies, which publish the documents, to correct any inaccuracies you may find.
Write a Dispute Letter
When writing your dispute letter to the credit bureaus, be sure to include a clear explanation of your reasoning, along with any relevant evidence or documentation that helps support your case. You should make photocopies of all your correspondences, and be sure to send everything via registered or certified mail, so you'll have a record of when it was sent and received.
Stay In Contact
When you contact the agency, it is required to investigate the issue within 30 days. The agency will pass on the dispute and information within it to the entity (person, business or other organization) that provided the information to the credit agencies in the first place. The information provider must also investigate the complaint and report its findings back to the reporting agency.
If it is deemed that you are correct, then the change is made on your credit report and you should have a more accurate credit report. If your dispute isn't resolved, for whatever reason, you can ask to have your dispute statement included along with your credit report when anyone accesses your report.
Keep a Paper Trail
As you start to send letters and officially challenge your creditor and/or credit bureaus, you'll need to create a good, organized system, such as a checklist or spreadsheet, to keep track of all your correspondences and where each issue stands. This may seem like overkill but it could come in handy; often it takes repeated phone calls and letters before you achieve resolution, so it's helpful to have records of previous times you have written or called, along with copies or notes on the company's response every time. Each time you have a phone conversation with a creditor, be sure to record the date and time, the name and title of the person you spoke with, and whatever was agreed upon as a result. Even after you've managed to resolve an error, it's a good idea to hold onto your paperwork for at least a few years; it's not uncommon for an item you've worked hard to remove to somehow, someday, reappear. That's when having a paper trail will be invaluable.
Negative but Accurate
If some information on your report is unpleasant, but accurate, then unfortunately you can't erase it - unless you were never notified of the problem. If you were never informed, then you are entitled to dispute the report, thanks to a provision of the new Fair and Accurate Credit Transactions Act of 2003 (FACTA). You dispute this type of situation in the same manner you do with the mistakes illustrated above.
If after much time and work the disputed item still has not been deleted or changed to your satisfaction, you may go back to steps 1, 2 and 3, and start again. There is no charge for requesting a reinvestigation. If you truly feel you've been wronged and the bureaus/agencies won't help you, it may be time to contact a lawyer. This is when you'll be glad you made sure to track and save all the careful documentation you've been keeping of your efforts up to this point. If you've got a late payment or penalty that's still in dispute, but that you can't get the bureau to budge on it, you can take some comfort in knowing that these negative marks will be erased completely in seven years.
Always Another Day
Lastly, don't beat yourself up.Many people find themselves in the situation of having to challenge a credit report. The key is to be organized and polite, but persistent. The steps to follow seem easy enough, but you've got to have patience, because credit bureaus are not always very cooperative. Clearly, your own credit report is your No.1 concern and you should treat it as such, but credit companies and bureaus have other priorities, so you have to keep at it and stay on top of things yourself. Above all else, that's the sure cure for credit rejection shock.