Mistake on Your Credit Report? 6 Steps to Take

Catch a mistake on your credit report? There's a way to fix that.

The information contained within the pages of your credit report helps determine the interest rate you'll pay on a loan. It can also impact how easy it is to:

• Buy insurance
• Rent a place to live
• Land the job of your dreams

That's an awful lot of power for a three-digit number to hold, but there it is.

What's scary is that 1 in 5 Americans who check their credit reports find a mistake -- an error that can change the course of their financial life.

So, what should you do when you find a mistake on your credit report? How can you make it right? It all begins by ordering all three free reports at annualcreditreport.com.

Typically, you're entitled to a free copy of your report from each of the three major credit bureaus once a year. Due to the pandemic, Americans are able to order a free credit report weekly through April 2022.

Next, comb through the report and look for mistakes. This can include:

• A credit card you don't recognize
• A bill from somewhere you've never lived
• A bill you have paid in full but still shows a balance
• An address that does not belong to you

Each mistake -- no matter how small -- can impact your credit. Highlight anything that doesn't look right.

Now it's time to dispute any mistakes.

How to dispute mistakes on your credit report

Both the credit bureaus and any business that supplied incorrect information are legally responsible for correcting mistakes at no charge to you. Your only job is to dispute the errors. Here's how:

1. Contact the credit bureau

It's possible that a mistake on one credit report will not show up on the others. You only need to reach out to one of the three credit bureaus to begin the dispute process:

• TransUnion
• Equifax
• Experian

2. Send a letter of explanation

You don't have to worry about getting fancy with the letter. A credit bureau only needs the following information:

• Your full name
• Your date of birth
• Your Social Security number
• Your current address
• Any other addresses you've had during the past two years
• A copy of your driver's license or state identification
• A copy of a bill (to prove that you are who you say you are and live where you claim to live)

The important thing is to dispute inaccurate information. Print the dispute form from the bureau's website, fill it out, and enclose it with your letter. Or include a list of each item that is wrong. Be sure to include the account number and the reason you believe it's incorrect. Be as detailed as possible, and if you have documents to support your claim, include them in the letter.

Some mistakes are easy to address. For example, if you were born in 1980 but your credit report shows a mortgage taken out in 1982, it's fairly easy to see that it's a mistake. If you find a credit card that was fraudulently taken out in your name, the process can take a little longer, but you can still have it removed.

Note: Send all correspondence by certified mail and pay for a "return receipt." This is important because it proves that the credit bureau received your dispute and the date it was received.

3. Keep copies of everything

If you find more than one mistake on your credit reports, it can be helpful to create a separate folder for each. Keep everything, from correspondence to your evidence, in that folder. That way, if a question arises you can address it quickly.

4. Wait 30 days

According to the Federal Trade Commission (FTC), credit bureaus have 30 days to investigate your dispute. If your complaint has no merit, they will stop investigating. Even then, they must notify you of why they've stopped the investigation and give you a chance to provide additional evidence.

Let's say your dispute involves a late mortgage payment. During the 30-day investigation period, the credit bureau forwards the evidence you submitted to your mortgage company. If the mortgage company finds that you're right, they must notify all three credit bureaus so the information can be corrected in all your files.

5. Examine the results

At the end of 30 days, the credit bureau must provide you with the results of their investigation in writing. If the dispute led to changes in your credit report, you also get another free copy.

If you ask, the bureau must send a notice of the correction to anyone who pulled your credit report in the past six months. If you were turned down for a loan or offered a higher interest rate due to the mistake on the credit report, the credit bureau must send a corrected credit report to that lender once you request it.

You can even request that a corrected credit report be sent to an employer if you were turned down for employment due to your credit report during the past two years.

6. If things don't go your way

If the result of the investigation does not cure the problem, you have the right to include a statement of dispute in your credit report. For example, if you believe late payments listed on the credit report are incorrect but cannot convince the credit bureau of that, include a note saying why you believe it's wrong.

Now, let's say that your payments were late but it was because you were in the hospital with a life-threatening illness or due to job loss. Include those statements as they help creditors view your credit report through the wider lens of real life.

Ben Franklin famously said, "In this world, nothing is certain except death and taxes." If credit reports had been around at the time, it's fair to imagine that Franklin would have added them to his list.