Wise choice of bread
There are several obvious reasons to worry about your credit score, and very few reasons why you should ignore it. After all, you will need a good credit rating and a solid credit history if you ever plan to buy a home or take out a car loan. Bad credit can even bite you again if you are looking to rent an apartment or apply for a specific job.
But your bill isn’t the only detail to look out for. You also need to keep track of your credit report – a document that lists your official credit history, including any accounts you open, balances owed, and payments you made.
Your report and your rating are inextricably linked. If your credit report gets misleading due to fraud or misreporting, it can easily lead to a sharp drop in your credit rating. Likewise, a clear credit report containing only truthful (and positive) information can help your credit history reach great heights.
This is why every year you should receive a free copy of your credit report from all three credit reporting agencies – Experian, Equifax, and TransUnion. Fortunately, this part is easy to accomplish through AnnualCreditReport.com.
How to dispute information on your credit report
Once you get a copy of your credit report from all three bureaus, you will want to go over all the details to make sure they are correct. Incorrect information that you may have noticed in your report may include:
- Errors regarding your name or personal information
- Accounts that aren’t even yours
- Accounts owned by someone with a name similar to yours
- Closed accounts marked as open
- Incorrectly reported late payments
- Accounts listed more than once
- Invalid account balances
- Incorrect credit limits on accounts
Through the Fair Credit Reporting Act (FCRA), both the credit bureau and the person providing information to them are responsible for correcting misinformation on your credit report. This means that if a particular retailer or bank reports an account that does not belong to you or the balance is incorrect, both the credit bureau and the retailer or bank must work together to fix it.
If you find an error, do the following immediately:
Give the credit bureau the wrong information about the error
The first step you should take is to inform the credit reporting agency of their error, bearing in mind that not all credit bureaus may have the same information. You must report the error to them in writing, paying particular attention to listing important details of the error with appropriate documentation. The Federal Trade Commission (FTC) even offers a sample letter that you can use if you need help.
Note that credit bureaus usually have 30 days to review your claim and are required to respond to you. They should also forward the information you sent them to the provider who shared the information with them in the first place.
Report who provided information about the bug
You will also want to provide the company reporting the incorrect information with copies of any documentation supporting the error. Be sure to include all the information required to support your claim, as well as copies of supporting documentation. The FTC offers another sample dispute resolution letter that you can use in this case.
Stay tuned for updates to your credit report
As a general rule, credit reporting agencies are required to inform you in writing of the results of your case. They are also required by law to provide you with another free copy of your credit report if your dispute results in irreversible changes.
You also have the option to ask the credit bureau to send notices of any revisions to anyone who has requested your credit report in the past six months. You can even send an updated copy to anyone who has requested a modified version of your credit report for employment-related reasons.
Taking care of your loan
While the steps above may seem tedious, it is important to understand the damage that incorrect information on your credit report can do. For example, if your report shows inaccurate late payments, your credit rating could plummet through no fault of yours. And if you have bills on your credit report that aren’t even yours, that could mean a much more serious problem, such as outright identity theft.
Fortunately, the small amount of time it takes to dispute an item on your credit report can indeed pay off to a large extent. At the end of the day, any negative information you manage to erase should stop lowering your score immediately.
However, you should also remember that you will only be able to remove false negative information from your credit reports. Any misleading information should remain on your report until enough time has passed. Generally speaking, negative information and reports can remain on your credit report for up to seven years, and bankruptcy can remain on your report for 10 years.
The essence
Errors happen all the time, and they may never be discovered unless you find them yourself. In addition to keeping you up to date on your credit reports, it can help sign up for a free service that gives you information about new accounts in your name or about fluctuations in your credit rating. CreditKarma.com and CreditSesame.com are two that offer similar free services with these features, so it’s worth checking out.
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