Your credit score is one of the most crucial indicators of your financial health. Most lenders will review your credit history to determine if you qualify for a loan or mortgage. However, your credit bureaus or creditors may make a mistake at one point of assessment, leading to credit report errors. At such a point, you need to act fast and fix the errors before it ruins your financial reputation.
To fix errors in your credit report, check with all three major credit bureaus to identify the mistakes. Then, write a dispute letter to the credit reporting agency, review the result, and update your credit score. You can also contact the data furnisher directly if the error is related to the information provided by your lenders or the Consumer Financial Protection Bureau (CFPB) if you are not satisfied with the dispute results.
Common credit report errors.
According to the Federal Trade Commission (FTC), about 25% of consumers have encountered errors on their credit reports that could negatively impact their credit limits. Similarly, one in five people opened disputes on the mistakes and updated their credit scores with new pieces. This is a clear indication that you are likely to see errors on the report submitted by your lenders or credit bureau at some point in building your credit score.
These errors will lower your credit limits or deny you the chance to open a new credit account or qualify for a loan if not corrected. As such, the Consumer Financial Protection Bureau suggests you should check for these errors at least once a year. However, after financial implementations due to the Covid-19 crisis, you can review each report from the major credit bureaus by visiting Credit Sesame or annualcreditreport.com, where you will receive complimentary weekly messages through April 20 2022.
The major credit bureaus are Experian, Equifax, and Transunion. These bureaus produce separate reports before being updated on your credit card. Therefore, since there might be slight differences in information from different bureaus, you should expect the following errors.
- Inaccurate personal information such as wrong name, addresses, birthdate, and Social Security Number (SSN). Such errors indicate identity theft and may negatively impact your overall credit score.
- Information or account that does not belong to you. This means someone’s lead with a similar name could have been listed on your reports, or someone opened an account with your details.
- Inaccurate account information such as wrong account balance, account numbers, and credit limits. You should also check to ascertain that closed credit accounts are not reported as open.
- Expired debts or negative information such as late payments and collection accounts may also reappear on your new credit report. Typically, such negative information should remain on your credit score for up to seven-year and automatically fall off when this time expires. However, if it does not, you need to open a dispute to fix it.
- Reinsertion of incorrect information that was disputed and removed from your credit report in the past. When such incorrect information reappears, you need to open a new dispute to remove it.
How to fix credit report errors?
Before moving to fix errors on your credit report, you need to understand that several parties are involved in assessing your credit score. The most common one is FICO, an analytic software that provides information about your credit score to businesses and consumers. The company also produces the most widely used consumer credit scores that lenders use to determine whether to lend money or issue credit cards.
1. Send a dispute letter
After identifying errors on your report, therefore, the best way to fix them is by sending a dispute letter to the credit bureau that produced the report with errors. Every credit bureau has a statement about your creditworthiness before updating the information on your credit card. Besides, these major credit bureaus, including Experian, Equifax, and Transunion, allow you to open disputes on inaccuracies indicated on each report. This can be done either online, through email, or by calling them directly.
When sending a dispute letter, ensure you include all the supporting documents to make it easier for investigation. These materials include:
- Your driver’s license or government-issued ID.
- Social Security Number (SSN).
- A birth certificate or divorce decree.
- Federal Trade Commission (FTC) copies or police reports if you are reporting identity theft.
- Your current address and addresses for the past two years.
- Bank statements.
- Billing statements.
- A canceled check or money stubs are showing a paid bill.
You can find sample letters to dispute credit report errors on the CFPB website. However, ensure you include a copy of an email verifying the status of the credit account that is incorrect. CFPB also recommends saving copies of the submitted letters and documents. If you send them through email, ensure it is a certified email with a return receipt.
2. Contact the data furnishers directly
Data furnishers are the financial institutions that provide credit bureaus with information to include on your credit report. This can be a bank, credit card issuer, or lender. Therefore, when trying to fix errors on your credit report, you can contact the data furnisher to correct mistakes on their side. Their contact details are usually found on your credit report, or you can get them for the correct address.
According to Kevin Haney, a credit bureau advisor at Growing Family Benefits, you can go to the data furnisher directly if the errors are related to debt payment or credit card status. However, if it is about identity theft, you should start with the credit bureau.
3. Wait for up to 45 days for investigation and response
Most credit bureaus will take up to 30 days to investigate the dispute and give their response. However, this period may be extended to 45 days under such circumstances as to when you submit a dispute after receiving a free credit report from annualcreditreport.com or if you submit new supporting materials during the 30-day investigation period.
After investigation, the credit bureau also has five days to report back to you about the account’s status and validate your dispute. However, if the credit bureau or data furnisher finds your disagreement to be “frivolous,” it may not continue with the investigation and fail to update your credit report. Such incidents may occur if you try to contest the same item multiple times without any new information or if you claim the whole piece is wrong without proof. If the credit bureau fails to investigate the dispute, you can open a recent disagreement with enough documents.
4. Review the results
If the dispute leads to a change in your credit report, the credit bureau should provide you with the results in writing and a free copy of a new account. It should also provide you with the name and address of the data furnisher that provided the inaccurate information. The data furnisher is also asked to update or delete the disputed item.
You can ask the credit bureau to communicate to all lenders that received a false report within the past six months. This helps to clean your credit history and increase your credit limits. If the disputed information is not changed, you are encouraged to move to the Consumer Financial Protection Bureau if you are sure the report is incorrect and explain in detail about the dispute with enough copies of proof.
The bottom line
Checking your credit report regularly is a good move that ensures you maintain a clean credit history and get approved for higher credit limits. Therefore, if you notice any mistake, you should dispute it immediately to remove all negative information. You can do this by following the above steps to get your credit report fixed professionally.