As a financially responsible individual, you should be checking your credit on a regular basis. You can request your annual complimentary credit report from AnnualCreditReport.com and review your monthly credit card statements.
If all goes well, your report will hold no surprises and your score will be in excellent shape or steadily increasing. Sometimes, though, you may find an error in your report. It might be a sharp decline in your score when you know you haven’t changed your spending or bill-paying habits, a large transaction you’re sure you’ve never made, or an unfamiliar line of credit. While it can be disconcerting to find a mistake in your credit report, the good news is you can contest errors like these and fix your score.
Mistakes you may find on your credit report
Credit report errors are quite common. In fact, 26% of participants in a study by the Federal Trade Commission found at least one error on their credit reports that brought down their score. A lower score can result in higher interest rates on loans and can be an obstacle when applying for a new line of credit or a large loan.
Most of these errors are the result of clerical mistakes, a lack of action on your part, or criminal activity.
Credit report errors include the following:
- You’re mistakenly identified as someone with a name similar to yours.
- A credit account was never included in your report, weakening your perceived creditworthiness.
- A creditor applied your loan or credit card payments to the wrong account.
- A creditor reported and recorded a legitimate credit account or debt multiple times.
- Your ex-partner’s accounts and debts still contain a link to your name.
- Identity thieves have used your name and credit file to open accounts and take out loans you knew nothing about – and it’s unlikely they have been making payments on those loans.
To avoid credit report errors, use your legal name on every line of credit you open, remove your name from any accounts you are no longer associated with and have all of your creditors report your open accounts to the major credit bureaus. As mentioned above, it is also crucial that you monitor your score to find mistakes as quickly as possible.
Three steps to dispute an error
If you’ve spotted an error on your credit report, don’t panic. Follow these three steps to dispute the error and fix your credit:
Step 1: File a dispute with each of the major credit bureaus.
You’ll need to inform all three major credit bureaus, Equifax, TransUnion, and Experian, about the error. All three bureaus allow you to file disputes online.
In your written dispute, you’ll need to clearly identify each disputed item in your report, explain why you are disputing these items, and ask that the errors be deleted or corrected. Include your full contact information, as well as copies of any documents that support your claim. You can also include a copy of your credit report, highlighting the items you are disputing.
You can also file your disputes by mail to Equifax and TransUnion; Experian currently accepts online disputes only. If filing by mail, it’s best to send your letter via certified mail with a requested return receipt. It’s also a good idea to keep a copy of your correspondence for your own records.
Mail your Equifax dispute to the following address:
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30348
Mail your TransUnion dispute to the following address:
Consumer Dispute Center
P.O. Box 2000
Chester, PA 19016
Step 2: Contact the creditor
After you’ve contacted each bureau, also reach out to the creditor that’s linked to the error in your report. This step isn’t necessary, but it may speed up the correction process.
Most creditors will provide a link or an address for disputes. When filing your dispute, follow the guidelines above and include all relevant information and documentation. Be sure to let the creditor know you’ve also contacted the credit bureaus, as they’ll want to include this information and a copy of your dispute if they report their findings to the bureaus. Ask for a copy of all correspondences between the creditor and the bureaus.
Step 3: Follow up in 30 days
The bureaus and the creditor should contact you within 30 days after filing your disputes. If all goes well, they will accept your dispute and restore your credit. In many states, you are eligible to receive a complimentary credit report following a registered dispute.
If one of the credit bureaus or a creditor refuses to accept your dispute or does not resolve the error in your favor, you can ask the bureau or creditor to include a copy of your dispute in your file and in all future credit reports. This way, a lender or creditor is aware of the alleged error when reviewing your credit. There may be a small fee for this service, but it is generally worth the price. If you feel the error is too significant to ignore, consider hiring a lawyer to help you contest the report and fix your credit.
Disputing an error on your credit report is fairly simple. Always monitor your score and be vigilant about correcting errors. The payoff can affect your financial wellness for years to come.
Your Turn: Have you ever filed a dispute for an error found on your credit report? If so, then tell us about it in the comments.
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