How to Fix Credit Boo-Boos

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Wouldn't you be surprised to discover you're dead, especially if the news came from your loan officer? One 30-year-old Detroit man who made national news after his allegedly deceased status was the one snafu on his credit report keeping him from getting a new car loan.

Few credit dings are that devastating. Still, credit reports may contain some inaccuracies. We're talking about flat-out wrong information -- not even those self-inflicted credit wounds that everyone tries to deny.

Various surveys over the years have found that a high percentage of credit reports -- perhaps 80% or more -- contain inaccuracies. The severity of the slipups can range from the rather innocent (such as misspelling your name) to the extreme (i.e., the undead Detroit man mentioned above). Most inaccuracies fall in the rather mundane category of "late payments," which you'll find described as 30, 60, or 90 days past due.

No matter what is called into question, there's only one thing to do: Clear your good name. Here's how to spot credit blemishes and -- if they're inaccurate -- make them go away.

Is it a scratch, a gash, or a fatal arterial wound?
There are two kinds of credit report blunders -- information that's outright inaccurate, and boo-boos that reflect the errors of your ways. Common reporting errors (the not-your-fault stuff) can include accounts mistakenly attributed to you, application notices that you didn't fill out, and out-of-date home address or employment information. Errors can also include omissions, such as the presence of a delinquency that you've already remedied, or an old collection action that is still being reported as overdue.

With a little diligence on your part, such inaccuracies can be updated or removed from your record relatively quickly. (Directions below.) Under the Fair Credit Reporting Act (FCRA), credit bureaus are required to investigate your claim within 30 days. If it determines that an error has been made, it must correct the boo-boo and notify the other credit bureaus and you (with a free report).

The other kind of uh-oh is the one you brought upon yourself. There's no denying self-inflicted credit record wounds (though you can try, and you might be successful if you catch the credit reporting agency on a good day).

As for handling inaccurate information in your credit file, the best way to approach the cleanup process is to start with the source. In most instances, it's listed right there on your credit report.

Six steps to disputing a credit report error
If you wish to dispute an item on your credit report that you feel is flat-out wrong, you can do so for free. When you contact the credit reporting company, they will investigate the dispute and, if applicable, issue you a revised credit report for free.

1. Start a record.
Every step of the way, be sure to keep good records of all of your phone conversations and copies of each letter/e-mail/carrier-pigeon missive you send. Send all letters via certified mail (return receipt requested), and be sure to include copies of any documentation (such as an account statement that shows an account paid in full) that supports your claim.

The latter is important, since you need to verify your claim of inaccurate information. Proof is anything from canceled payment checks to past billing statements. If your statement-filing system isn't up to snuff, you'll need to get past account statements to support your claim. Lucky for you, the Fair Credit Billing Act requires the creditor to keep your past statements on file, so that you can access them. Unfortunately, you'll probably have to pay for the privilege. Call the billing or records department of your creditor and ask for what you need.

2. Inform the credit reporting agency (Equifax, Experian, or TransUnion), and tell them which information you believe is inaccurate.
Check out the Federal Consumer Information Center sample dispute letter. The FCIC suggests that you enclose a copy of your report with the items in question circled.

Within 30 days, the credit reporting agency will reinvestigate the items in question. They will forward all relevant data you provide about the dispute to the "information provider" (a lender, creditor, or other business that reported the inaccurate information). The creditor is then required by law to investigate your complaint and report its findings.

If the disputed information turns out to be inaccurate, the creditor must notify all nationwide credit reporting agencies, so they all can correct the information in your file.

3. Inform the business that sent the erroneous information of your dispute.
Now that you've honed your letter-writing skills, let the creditor (or other information provider) know in writing that you are disputing an item it put on your report. You want to include communications with the credit bureau as part of the documentation trail, but the source of the problem is your best bet for successful resolution.

Be sure to tell them exactly what you want them to do -- whether you're requesting that they delete a false item completely or update an old entry.

If your creditors disagree with your claim, they will likely explain why the information is accurate. Either they'll be correct in their explanation (and you just have a really bad memory), or they've somehow misunderstood your dispute, in which case another letter may be necessary.

4. Get the good stuff put into your file.
If you've been told you were denied credit because of an "insufficient credit file" or "no credit file," take your pulse. If you're alive, and you have accounts with creditors that don't appear in your credit file, you can ask them to kindly report your stellar behavior to future reports. They are not required to do so, but if you ask nicely and they can verify the accounts, most will add them to your report for a fee.

5. Celebrate victory!
If your dispute results in a change to your credit report, the credit bureau will give you the written results and a free copy of your report. (This is in addition to theyou can get from all three reporting bureaus once a year at annualcreditreport.com.) While this marks the end of most disputes, be aware that the information can show up again. That will only occur if the creditor verifies the disputed item's accuracy and completeness. If that happens, you'll receive notice from the credit bureau and you can take it from there. Again.

6. Accept defeat -- but make sure you get in the last word.
If you are unsuccessful in removing information from your credit file and reach an impasse, you do have the option of taking legal action. (Your state's attorney general's office can help you locate a lawyer who will advise you on taking a creditor to court.) If you don't want to go that far, your next option is to attach a letter of explanation to your credit file. Be sure to cover all three of the major credit bureaus as well as the offending business. The business is obligated to include your letter in any future input to the credit bureaus. Verify that they do.

Finally, remind yourself that it could be worse. At least your lender knows (and reports) that you're alive.

For more on boosting your credit score, read about:

• How you can improve your credit in 60 seconds.
• Little white lies that can help your score.
• 5 easy ways to ruin your credit.
• Want a higher score? Here's what to do.
• More advice on getting the best credit score you can.