How to Dispute Credit Report Errors
Understanding Credit Reports isn’t exactly science, but it can be a bit difficult for some individuals to figure out. That included me at one point, too. In this article we will attempt to explain how credit reports work and how you can use them to your advantage down the road, like when you start thinking about that new car, or even that new home you’ve been dreaming about.
Understanding Credit and How It Can Affect You
Credit is who you are. It’s your payment history and transaction history through credit. It shows when you applied for credit, your accounts, personal information and it even shows who has looked at your credit over a period of time. Whether you plan on using it or not, credit is an extremely important part of every Americans life. That’s something that you should accept before it’s too late.
There are 3 Credit Agencies that you should familiarize yourself with. Experian, Equifax and TransUnion. These credit reporting agencies are used by companies to report on-time payments, delinquent payments, missed payments, foreclosures, etc. Basically, they’re used as a way to help other people determine whether or not you’re capable of being trusted with more credit, now or in the near future.
These agencies not only use reporting, but also a scoring system as well. This gives the creditor an easier way to determine the type of person you are, financially speaking, of course. This scoring system allows them to better categorize people who are looking to obtain new credit.
Negative (bad) items will appear on your report if you’re late on payments or you simply stop paying. The same goes for positive information. These creditors or collection agencies will post this information each and every month via a computer monitoring system. The credit bureaus will update your report(s) based on this information that they receive each month, good or bad.
This is why you must be careful with new credit that you can’t actually afford. Student loans can be the biggest problems for most people. You need to think things through before you apply for new credit, regardless of how great it sounds at the time. Sleep on it.
Getting Your Free Credit Report
So, how can you find out what’s on your credit? According to the Fair Credit Reporting Act, every American is entitled to their free credit report each year. This means that you can use AnnualCreditReport.com once per year to obtain a copy of your credit. You can then use this report to dispute any incorrect items that have been placed on your report by any of these agencies. It happens, and this is why the FCRA exists, to help us better control our own credit destiny.
Once you visit AnnualCreditReport.com (as mentioned above), you can enter in your details and get a free copy of each report (Experian, Equifax and TransUnion) under your own name. There will be a verification process to ensure that you are who you say you are. This helps prevent other people from digging up personal information about you and, perhaps, potential scammers or fraud.
NOTE: If you have issues with the verification process (as I did), you may need to contact the agency by phone or else follow their instructions regarding how to get your report by mail or phone. It’s rare that you will encounter these problems, but if it does be sure to follow the instructions.
Now that you have access to your credit reports – print them out. Don’t close out the window until you do this. If you do not have a printer then you should at least copy and paste the information into a file, or even save the page (if possible) to your local machine. Do not close the page until you have verified that the report is on your machine.
You will notice that these credit scores do not show up on your credit reports. These scores can be purchased individually through the reporting agency or through a website such as CreditKarma.com. I suggest this website as it gives you a better idea of all 3 “main” scores, as they do have multiple scores that you don’t even have access to. This may sound confusing, but just note that you really only need to track one score and, as long as you continue to work on your credit for all 3 bureaus, the scores will all be similar in the end. That’s why CreditKarma is a great site; it uses one score and helps you track the scores easier, and it’s free to use!
What happens if you’ve already used up your free annual credit reports? If this occurs, you’ll have to pay a fee to access them. You can do this individually or through a service, such as MyFICO.com. These services will (usually) also show your credit score for each bureau.
OK, so now you have your reports in front of you. Now what?
Each report will show you open accounts, closed accounts (if applicable), accounts in collection, inquiries (soft and hard credit pulls) and various other information.
Understanding Your Reports
First thing’s first: let’s start looking at any negative or potentially negative items. Highlight them, write them down or whatever it takes to remember them. Are they your accounts? If they don’t belong to you, you will need to dispute them ASAP. We will go over this shortly. The main thing to remember is that you need to not wait around to dispute these items. You will want to get rid of them immediately, as in today, when you’re finished reading this.
I suggest that you take a look at any suspicious activity that may appear on the report. This could be accounts, addresses and even inquiries. Are there any addresses that don’t belong to you? How about inquiries that you’re not familiar with? While there’s not much you can do about this, it should help you understand how easy it is for someone else to open accounts with your details if you’re not cautious. And if they do, guess who foots the bill down the road? Yep, you.
Whether you’re looking for a house, car, new bank account or loan, you will have to deal with credit reports. Mortgage brokers, auto dealerships and other financial institutions will pull your credit to verify your credit history, score, payment history and various accounts to determine if you’re the right fit for the type of credit you’re trying to obtain.
On your credit report(s) you should find the Creditor or Collection agency, the type of loan/credit, your responsibility for that credit or loan, the open date and the status, reported since and last reported, terms and monthly payment, credit limit or original amount, recent balance and high balance, status and account history, comments, history of your accounts, record of request for your credit history and various other items. Most of these are pretty straight forward, but we’ll discuss them in another article.
Here are some of the things you may come across on your Credit Reports:
Late Payments: If you’re 30 or more days late on your payment, the creditor or financial institution that you obtained the credit/loan from can and will report that late payment to the bureaus.
Charge-offs: if the creditor cannot collect the payment after 180 days (roughly 6 months), they will consider them bad debt and charge them off. This is where 3rd party collection agencies come in. They purchase data filled with charge-offs and attempt to collect on that debt.
Inquiries: There are 2 types of inquiries, soft pulls and hard pulls. Hard pulls are when you apply for credit and the creditor pulls your credit report for the purpose of giving you a loan/credit. This not only damages your credit, it also stays on for up to 2 years. Be careful of whom you apply for credit with and try not to apply and less you’re sure you will get that credit.
Judgements: judgements can be a bit more tricky. If you fail to pay your bills and the creditor sues you and wins, this will show up on your report(s). Not only that, it can stay on your report for 7 years and can even be renewed until it’s paid or up to 20 years! You may need to consult with a lawyer on this one, if applicable.
Child support: missed child support payments can show up on your credit, too. Be sure to make your payments or they can be seen for up to 7 years.
Tax Liens: Tax liens are public record(s), and they can also show up on your credit report if you do not pay your bill(s)/liability to the Internal Revenue Service.
Foreclosure or Repossession: if you default on your home loan/mortgage and the bank takes the house back, it will appear on your credit report for 7 years. The same goes for repossession.
Bankruptcies: if you file for bankruptcy you will notice this on your report. You should not only see the filing date, but also the date of the discharge. Chapter 7 bankruptcies can stay on file for 7 to 10 years. Chapter 13 bankruptcies will stay on file for 7 years. Even if it was not discharged, a dismissed bankruptcy will stay on your credit report for up to 10 years.
Start Disputing Errors Today
Now we need to take those accounts that don’t belong to you and dispute them. There’s a few ways to do this, but I highly suggest the more difficult way, which is via Mail, using a Certified Letter. By using a certified letter you will be able to track the date that the letter was received and calculate the time it took the credit bureau with coming to a conclusion in the dispute process.
The Credit Bureaus have 30 days from the time of dispute to remove the negative item or send you a reason why they could not. During these 30 days they will contact the creditor to ask them for proof as to why they have listed the item in the first place.
So, let’s get moving.
1. Get the reports in front of your face so you can go through each one. Find all negative items that you want to dispute.
2. Get any and all documentation that you can use in order to successfully dispute the items, if necessary. Some of these documents may show proof that you paid the account off, that you are still making payments or that you have no idea where they came from. Any information that you may have is another tool for you to win.
3. Write a dispute letter. This letter should be short and sweet and straight to the point. The letter should detail the account(s) you’re trying to dispute. However, you should stick to disputing up to 3 at a time and no more, unless you are absolutely sure that all items are not yours. It’s best to do 3 at a time, regardless. Be sure to note all of the information on each account.
– Remember that you need to write a letter to each credit bureau.
– Be sure to copy those letters, just in case.
4. Send your letters via Certified Mail and count the days, return receipt requested. After 30 days you should receive letters back stating that the bureau(s) have removed the item(s) or they will provide you with information on any inaccuracy.
5. Follow-up, if necessary. If they didn’t remove it/them the first time, send it again. The first time may not work, but re-sending the letters can help. Trust me, I’ve done it and it has worked successfully.
Continue sending out the letters until you’re satisfied with the removal of the negative items.
– If you are still having problems with the removal of negative items, get a little tougher. There are plenty of ways to do this, but it’s beyond the scope of this article. You may eventually have to contact the creditor and take it up with them. This link may be of help if that’s the case.
Remember: your credit isn’t just there for no reason. It can prevent you from doing a lot of things, including finding a place to live, causing insurance rates to go up, as well as many other issues that I’m sure you’d rather not deal with. Your credit is who you are, and that’s the cold-hard truth. It’s going to hurt you or help you one day. Make the choice to correct any mistakes and get your credit back in order.
Experian, NCAC, PO BOX 9701, Allen, TX, 75013
Equifax, PO BOX 105518, Atlanta, GA, 30348
TransUnion, PO BOX 2000, Chester, PA, 19022