Have you found an error on your credit report?
You're not alone. In a study conducted by the Federal Trade Commission, one in four consumers found errors on their credit report. These errors can lead to unfavorable loan terms and higher interest rates on credit cards - potentially costing you thousands of dollars.
Fortunately, you can get these errors fixed by knowing the types of common errors - and where they come from.
After reading this article, you'll know how to effectively dispute mistakes on your credit report and improve your chances of getting approved for a new credit card, loan, or mortgage.
Know The Types of Credit Reporting Errors
Before you can dispute an error on your credit report, it's important to know what types of errors can occur. These are three main types of errors that can occur:
- Personal information errors
- Account-related errors
- Derogatory mark errors
Personal information errors may include incorrect name or misspellings of your name, addresses you've never used, or mistakes in employer information.
Account-related errors may include a loan that doesn't belong to you, an account listed as closed by the provider that was closed by you, or a late payment that's older than seven years.
Derogatory mark errors may include an account still showing as active even though it was discharged in bankruptcy or a collections account that shows as unpaid even though it's been paid off.
Why Do Errors Happen?
There are many reasons mistakes happen.
According to the National Consumer Law Center, the following are the three main reasons:
- Mixed files: This occurs when information relating to one person is placed in the file of someone else. Mixing files can happen when two people have similar names, Social Security numbers, or other identifying information.
- Identity theft: According to Javelin Strategy & Research, over 12 million people experienced identity theft in 2014. Identity theft poses a serious risk for inaccuracies on a credit report because any charges and new accounts are considered fraudulent.
- Furnisher errors: Companies that report information to the credit bureaus can also make mistakes. This is usually due to simple data entry errors.
Now that you know what types of error happen (and why), you're equipped to dispute any your find on your report.
What can you do when you find a mistake? Keep reading to find out.
How To Resolve Credit Bureau Errors
Did you know there are three credit bureaus that could have a mistake?
Experian, Equifax, and TransUnion each put together credit reports for consumers. Companies such as credit card issuers, debt collection agencies, and loan providers report your account information to one or more of these credit bureaus.
The credit bureaus then collect that information and record it on your credit report.
Remember: You have a right to view your free credit report once a year from each of the credit bureaus.
If you find an error on your credit report, you can dispute it with the credit bureau by mail or online. There are pros and cons to each method, but both should work.
Dispute By Mail
The traditional way credit bureaus receive complaints is by mail. The benefit of using mail is that this process is familiar to them.
To dispute an error on your credit report by mail, write a dispute letter and send it via certified mail so that you can track its shipment.
Be as clear and concise as possible. Make sure your information is accurate and provide copies of any supporting documentation such as payment records, bank statements, or court rulings.
Always include your correct return address for prompt communication.
You can also use the credit bureaus online portals for disputes and to upload supporting documentation. You will be notified of the results of your dispute via email.
Contact Information For Credit Bureaus
Below is the contact information for disputing an error with each of the three credit bureaus.Experian
P.O. Box 4500
Allen, TX 75013
P.O. Box 740256
Atlanta, GA 30374
P.O. Box 2000
Chester, PA 19022-2000
How To Resolve Data Furnisher Errors
In addition to resolving errors on your credit report with the credit bureaus, it's a good idea to contact the data furnisher as well.
You can go directly to the data furnisher to resolve an error and speed up the process. The data furnisher is the company that supplied the information to the credit bureau. Data furnishers include: credit card companies, lenders, utility companies, debt collection agencies, and even fitness centers.
If the error you spotted is account-related, this may be the best route.
The first thing you want to do is find the correct contact at the company. Look at the company's website for the address and contact information for filing a dispute. If you can't find it, call their customer service number and ask for the mailing address.
Make sure you include all relevant information. If the error is related to payment history, include copies of your statements that show proof of payment.
Follow Up On Your Dispute
Once you've successfully filed your dispute, you may be wondering how long it takes to process.
By law, consumer reporting agencies must investigate your dispute within 30-45 days of receiving it. After completing the investigation, the company has five business days to notify you of the results.
If you're wondering what your status is, or if they received your paperwork, call the company. It can take over a month for the dispute to be officially resolved - but knowing that they received your information can be a relief.
When you file your dispute with the credit bureau, the credit bureau will likely contact the data furnisher to settle the matter. The data furnisher will investigate the error and report back to the credit bureau. At that point, a determination will be made and the credit bureau will notify you.
When you filed your dispute with the data furnisher, the company will investigate the matter and report directly back to you.
Avoid These Common Mistakes
Getting inaccuracies corrected or removed should be simple (even if it takes some time). Avoiding these mistakes help make the process smoother and quicker for everyone involved.
Here are three common mistakes to avoid:
- Disputing by phone: When you try to dispute an error on the phone, you are at the mercy of whichever representative happens to take your call. Although the call may be recorded, you don't have any track record to follow up on.
- Disputing only with the credit bureau or data furnisher: You may be tempted to rush the dispute process to get it over with, but being thorough will improve your chances of success. Here's how: file a dispute with both the credit bureau and the data furnisher.
By skipping the process of filing with the credit bureau, you risk not being able to challenge the data furnisher's determination.
- Not including supporting documentation: Good records are your key to success. If you don't include enough information to support your claim, you risk having the dispute denied. Supporting documentation includes things like payment records, bank statements, and court rulings.
In your dispute letter or on the online portal, make sure you include details regarding why the error is, in fact, wrong. Also, make sure you include evidence that proves the mistake.
Credit reporting errors are common - and approximately one in four people have at least one. Finding and correcting these errors improves your chances of getting approved for a new credit card, loan, or mortgage.
Remember: When reviewing your credit report, check your personal information and account history carefully. If you find an error, dispute it with the credit bureaus or data furnisher and follow-up to make sure it's corrected.
Make sure you check your credit report from each of the three credit bureaus every year so that you can spot and dispute any errors promptly.