Correcting any errors on your credit report is one of the first steps consumers should take when they're looking to improve their credit score. Incorrect information, like a report showing an unpaid debt even though you've paid off the collection months or years ago, can produce a serious negative impact on your credit score.
Don't expect these issues to simply resolve themselves. Inform the credit bureau that its information is inaccurate by filing a dispute.
A study from the Federal Trade Commission found that 5% of consumers have an error on their report that negatively affected their insurance and loan rates. Twenty-five percent have an error that may have at least a small impact on their credit score.
Here's how to go check your credit report and file a dispute with a credit bureau.
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What you're looking for
Before you go about filing a dispute about the information on your credit report, you need to know what you're looking for. Simply put, you're looking for inaccurate information. But this can come in three general categories, all of which comprise part of your credit report.
The first category to understand is derogatory marks. These are negative records on your credit report that will stay with you for at least seven years. Bankruptcies, foreclosures, debt collections, tax liens, and civil judgements all fall under this category.
Common derogatory marks errors include:
- A paid-off debt collection that still shows a balance.
- Anything you've properly dealt with (paid-off balances, liens, etc.) that's over seven years old but still shows up on your report.
- A bankruptcy older than 10 years.
- Accounts that were discharged through bankruptcy but still show a balance.
The next category are your credit accounts. These include any mortgages, car loans, personal loans, and revolving lines of credit such as credit cards.
Common credit account errors include:
- Loans or credit card accounts that don't belong to you and you're not liable for.
- Accounts that you closed but say the provider closed them.
- A late payment more than seven years old.
The last category is your personal information. This includes your full name, current and previous addresses, and employment information. While this category is less likely to affect your credit score, if there's an inaccuracy it can still affect lending decisions.
Common personal information errors include:
- Incorrect name listed on the report.
- Addresses you've never lived at or used as a mailing address.
- Incorrect employment information.
Check your credit report for free
Now that you know what you're looking for, it's time to look up your credit reports. You can get a free copy of your credit report from each of the three bureaus once a year at annualcreditreport.com. Download and print them out, so that you have your own copies.
There are several private companies that can provide an overview of your credit report and credit scores for free. However, they're not as good as going straight to the source and getting the real thing.
If you must, you can pay Experian or another national credit reporting agency directly for a copy of your credit reports. Experian offers reports and scores from all three bureaus for $39.95.
Disputing account related information
If you see a problem with one of your credit accounts, you may try contacting the data furnisher first. If the data furnisher is a credit card company that you actively have a relationship with, it will probably investigate the issue. But keep in mind the furnisher has no obligation to investigate many disputes.
Still, this can be the fastest way to resolve issues with account ownership and payment history. So if you see a late payment on your report, but you've never paid a bill late in your life, try giving the furnisher a call first.
Sometimes you'll be able to file a dispute over the phone. More often than not, you'll be given a mailing address to send a written dispute along with any additional evidence you'd like to provide. Consider including a copy of your credit reports with the disputed account highlighted, any pertinent records you kept, and a written explanation of the inaccuracy.
Disputing everything else with the credit bureau
For everything else -- derogatory marks and inaccurate personal information -- it's easier to go through the credit bureau. These are usually pulled from various public records, and it's easier for the bureau to track down the source than it is for you.
Filing a dispute with any of the three credit bureaus is easily done online. Just go to the bureau's website, and follow the directions. Here are the dispute websites for each bureau.
You can also call or mail your dispute to the bureaus, but using the online forms is by far the easiest and most convenient method.
Now what?
Credit bureaus are required to investigate your dispute, assuming it's not frivolous, within 30 days. Most disputes are resolved well within that 30-day limit. Simply sit back and try to take your mind off your credit score for a couple of weeks.
When the bureau responds, it'll also provide an updated copy of your credit report for free. Be sure to review the response and new report to ensure the dispute was resolved to your satisfaction.
What if you're not satisfied with the result of your dispute?
If the bureau or data furnisher didn't resolve your credit report dispute in your favor, you can try contacting the other party. In other words, if you contacted the bureau, try contacting the data furnisher.
If you the other party still can't resolve the issue, you have the option of adding a statement to your credit report. The statement should simply summarize your dispute, and everyone that pulls your credit in the future will be able to see your statement. While the statement won't improve your credit score, it could help sway future landlords, insurance providers, and lenders.
Protect your credit score
Taking the steps to review and correct inaccurate information on your credit reports is one of the fastest ways to improve your credit score. The process is easy if you know what you're looking for. Everyone should take some time to review his or her credit reports once a year to check it for errors. It's free, and it can save you a lot of money down the road.
