How to dispute and correct credit history errors

If your credit report contains an error, you must correct it – the sooner the better. A serious mistake on your credit report could cost you the next time you buy a car or cell phone, apply for a mortgage, or look for a job or apartment.

Errors are more common than you might expect. Starting in 2012, the Federal Trade Commission began a series of studies on the accuracy of credit reports.

The study found that one in five consumers had at least one error on their credit report, and one in 20 had errors serious enough to be denied lower interest rates, but many consumers don’t even realize there’s a problem until will not apply. for a new line of credit and get rejected.

If this has happened to you, don’t panic, experts say. Your credit is not doomed, unless, of course, your credit report shows other problems such as delinquent loans, judgments, or other delinquencies. But it will take patience and perseverance to clear up legitimate questions.

After all, it is the information in your credit reports that fuels the creation of your credit scores, which most lenders use to determine whether you are creditworthy or not.

“Some consumers have heard so much about how complicated the (fixing) 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 cases involving loans. . “This is a mistake because this information is used daily by lenders, insurance companies and employers 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 report

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.

This is the only site where you can get reports for free in accordance with the law. Financial advisors consider it a good idea to check their accounts at least once a year. Many other sites that offer “free” reports come with terms and conditions.

Even if you have already received your annual report, you are entitled to another free report as required by law if you believe your file is inaccurate due to fraud or if you have been denied credit, insurance, or employment within the last 60 years. days.

Ira Reingold, executive director of the National Consumer Advocacy Association, advises asking for reports from all three organizations because they often contain different information.

2. Gather Documents to Support Your Case

If you find an error in your report, start collecting evidence to prove that the information is incorrect. This could mean looking for a document that shows you closed an account on a certain date, or finding a canceled check that shows you made a payment.

Also carefully review your report for any typographical errors, incorrect dates of birth, or incorrect addresses that may indicate identification confusion. Because agencies have rather fuzzy matching criteria that allow for data entry errors, files of two people with similar names often end up being merged, Reingold said.

“A lot of people think their identity has been stolen, but often the credit bureau mistakenly merges the files,” he said. “All they need is seven of the nine digits of your social security number and a similar name.”

3. Write a clear and detailed dispute letter

You can start with this sample letter from the FTC, but you can include more information if needed.

Clearly state in your report each item that you dispute, explain why you dispute the information, cite any supporting documentation that is attached, and ask that the item be removed or amended.

“Disputes need to be specific,” says Rod Griffin, Experian’s director of public education. “For example, it is important to state that “the account does not belong to me”, or “payments on the account have never been late”, or “the account is fraudulent”.

Leonard Bennett, a Newport News, Va., consumer lawyer who helps clients fix credit mistakes, recommends attaching a copy of your credit report, with each error highlighted and circled, and copies of all supporting documentation.

He also offers to notarize your letter and provide a copy of your driver’s license and utility bill as proof of your identity. “A lot of times bureaus dismiss a dispute simply because they decide they need more identification,” says Bennett.

4. Avoid the online complaint form

You might be tempted to use the bureau’s convenient online dispute form, but experts say it’s not a good idea. The online form requires you to select from a list of specific issues that may not fit your scenario, leaves only a limited amount of space for explanation, and generally receives less attention than a written complaint.

“In almost all cases, online disputes are handled entirely by the computer and without human intervention,” says Bennett. Also, if you send a letter by certified mail with acknowledgment of receipt, you can prove that it was sent and received.

If an error is found in the reports of all three credit bureaus, Ulzheimer and Rheingold recommend sending separate complaints to each of them, even if they should inform each other of any errors they find.

Clearinghouses are also required by law to forward your information and complaint to the bank or debt collector that reported the debt (often referred to as the “provider”), who is required to conduct their own investigation.

Until recently, bureau employees simply had employees read your letter and convert it into a two- or three-digit computer code, add a summary of your complaint, and forward it to the furniture supplier.

They now have a 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 furniture supplier yourself to get their attention and make sure they see everything.

5. Keep a paper trail, wait for a response

Under the Fair Credit Reporting Act, bureaus are required to investigate allegations of error. However, it is not clear how thoroughly they are investigating. “We saw a lot of reports that they only spent three to five minutes on,” says Reingold.

“They have this automated system where you submit a dispute, it turns into computer code, goes to the supplier, and then comes back to you like a parrot in denial, and nothing is really investigated or resolved,” he says.

By law, the bureau has 30 days to respond, but because the process is so automated, most consumers receive a response within a few weeks. Meanwhile, make sure you store your documents and keep them in order.

“If you end up having to go to court, you need to have good paperwork,” Ulzheimer says. “Create a file, keep copies of all your supporting documents and all correspondence to and from each bureau.”

If the bureau corrects your report as a result of its investigation, it must send you a free copy of your new corrected report. You can also ask the bureau to send a correction notice to any company that has received your report in the past six months.

6. What to do if your complaint is denied

If your correction request was denied, you still have options. By law, you have the right to file a 100-word written challenge statement that will be included with your credit report so that anyone who accesses it can read your version of the story.

You can also file a complaint with your state’s attorney’s office and the Consumer Financial Protection Bureau (CFPB).

“This can be useful because the CFPB has regulatory powers over reporting bureaus, and the penalties they impose on other companies have been enormous,” Ulzheimer says. “Agencies have no interest in being on the wrong end of a CFPB penalty. So it’s like bringing your older and stronger brother into battle.”

If this is a serious mistake, you may want to consider hiring a lawyer to handle your case – you can find a lawyer with experience in this type of case at the National Association of Consumer Advocates. Keep in mind that you are required by law to file a formal complaint with the credit bureau before you can sue.

Most lawyers take on these contingency cases, so it shouldn’t cost you anything. In some cases, the damage can be enormous.

One jury awarded an Oregon woman $18 million for a mistake that the credit bureau failed to correct despite two years of complaints, although the judge later reduced the amount to $1.62 million.

“Keep in mind that most of these cases will be settled out of court for a small amount of money, but for most people this is normal. After all, you really want your report to be corrected,” says Ulzheimer.

bottom line

Check your credit report often to find and correct errors. This can be quite a complicated process, but it’s worth it as lenders use this information to evaluate your creditworthiness.