The key to fixing errors on an individual credit report is simple: catch it early. The faster mistakes are found, the quicker they can be fixed and the less impact the mistakes will have on your credit scores.
Credit reports are a financial snapshot of a person and the data can have an effect on whether or not that person is approved for home loans, car loans, insurance, apartment leases and checking accounts.
According to the U.S. Federal Trade Commission (FTC), a credit report contains information such as your past mailing addresses, debt-load, a record of paying bills on time, lawsuits and bankruptcies.
An error in any one of these factors can have negative financial repercussions unless it is fixed. Since credit reports impact how much interest is charged on a loan, for example, it pays to correct errors.
Mistakes Vs. Fraud
According to the credit reporting agency Equifax, a credit report can have two types of errors: a mistake and a fraudulent listing.
A mistake is caused by wrong or incomplete information that is submitted to a credit bureau by a creditor. Oftentimes, the mistake is minor and is caused by human error.
The second kind of error is fraud, and it is a whole different ballgame. Fraud is what happens when someone steals your credit card or assumes your identity to obtain credit and run up a debt. The Federal Trade Commission estimates that 9 million people each year are victims of identity theft. (For information on how to prevent identity theft, see Helpful Facts And Tips On How To Prevent Identity Theft.)
How To Get Your Credit Report
Under the federal Fair Credit Reporting Act (FCRA), each person is allowed to order one free copy of his or her credit report each year from each of the three nationwide credit reporting agencies: Equifax, Experian and TransUnion. Therefore, you should check your credit report at least once a year to check for errors and fraud.
There are three easy ways to obtain your credit report:
- Online: The credit agencies have set up a website, annualcreditreport.com, for consumers to easily order their credit reports from each of the three.
- By Phone: The free credit reports also can be ordered over the phone from the three agencies by calling (877) 322-8228.
- By Mail: A third way to order the credit reports is to fill out a request form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
In addition to the free annual report, the FCRA also entitles consumers to obtain a free credit report if something happens like a company denies an application for credit, insurance or employment because of the credit report, the FTC said. The consumer must ask for the report within 60 days of receiving notice of the denial of credit.
Once the credit reports are in hand, look them over carefully for anything that doesn't match personal finance records and make a note of any errors.
Once an error is spotted on a credit report, contact the credit reporting agency by mail to request a correction and provide copies of any documents that would support your claim that it is an error. In your correspondence to the credit agency, make sure that you:
- Identify the item in dispute
- Explain why the item is in dispute and is considered an error
- State the facts of the case
- Request that the item be removed or corrected
Send the letter via certified mail with "return receipt requested" to be able to document when the credit agency received the letter and make sure to keep a copy of the letter and any enclosed documents for personal records.
Once the credit agency has your request, it can begin an investigation into the dispute. The credit agency will forward the disputed item to the information provider to investigate. If an error is found, the information provider must submit the corrected information to all three credit reporting agencies.
Equifax confirmed that the process can take between 30 to 45 days to complete.
After the correction has been made, you can request that the credit reporting agency send corrected copies of the credit report to anyone who received the report in the last six months. For employment purposes, the consumer can request a report be sent to anyone who received it within the last two years.
If a disputed item isn't corrected, a consumer can request that a statement of the dispute be included on the credit report.
No Error Is Too Small
Some people find errors on their credit reports but choose not to fix them because they consider the errors too minor. Do not do this.
Errors that you might think are trivial like a wrong address can have a negative impact on your ability to qualify for credit.
The bottom line is that the best way to fix errors and detect fraud is to frequently monitor your credit report. This will allow you to catch any discrepancies early. If you do encounter an issue, follow the guidelines above to resolve it as quick as possible.