How to Clean Your Credit Report of Costly Mistakes


There are all sorts of errors that can creep into your credit reports – an account that isn’t even yours, a “late payment” that was actually made on time, a paid debt that’s still listed as in recoveries.

It can mean trouble. Your credit reports are used to calculate your all-important credit score, which determines your access to loans, credit cards, apartments, and even jobs.

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According to an FTC study from last year, one in 20 people have significant errors in their credit report, enough to cause their credit score to increase by at least 25 points when corrected. It is not to be despised.

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Errors can appear on your report when lenders, banks, or credit bureaus get it wrong. However, it is your responsibility to have them repaired. “Credit reporting agencies have no obligation to correct anything on a credit report unless you tell them it’s wrong,” says John Ulzheimer, credit expert at CreditSesame.com.

The only way to find out about errors on your credit reports is to check them regularly. Go to annualcreditreport.com and request your three reports, one from each of the major credit reporting agencies: Experian, TransUnion and Equifax. This is the only place to get them for free, once a year.

As soon as you have your reports, carefully analyze the errors. A slightly misspelled address or variation of your name is minor; get it fixed but don’t worry too much. The most serious errors include accounts that don’t belong to you, collections that don’t belong to you, late payments that weren’t late, and loan applications that you didn’t authorize.

If you found something that you think is seriously inaccurate (rather than unfortunate), file a dispute. If the same error occurs in more than one report, you will need to file a dispute with each credit bureau. Fair? Nope. But the responsibility is on you.

Here are some best practices to keep in mind:

Consider postal mail. Filing your dispute online is the quickest option – and earlier this year the credit bureaus started allowing you to upload documents that help explain your dispute. It is an improvement. But experts say a letter sent by post might still be the best solution. The online form can be rigid (like a drop-down list of reasons for a dispute), says Ulzheimer, and you may find yourself accepting legal language you don’t want.

Fill out the right forms. The FTC has a letter model you can use to explain your dispute. Equifax and TransUnion also require you to submit their dispute form with your letter.

Explain yourself. “Be crystal clear” about what you’re challenging, Ulzheimer says. Don’t just say something is wrong, but state the facts of what is wrong and why. Include a detailed list if there are multiple issues. “You have to write it assuming the person reading it knows nothing about you,” he says.

Bring evidence. This is your chance to substantiate your claim however you can and prove you’re right about the error. Hunt down all the documents that could be useful: payment statements, court documents, identity documents, letters. For example, if a loan payment is listed as late on your report, but you have a monthly statement from the service agent showing it was made on time, include a copy (never the original) with your dispute. Circle or highlight relevant information.

Document everything. Before sending your dispute, make copies. Also record any conversations you have with credit bureaus, banks, or lenders. This creates a paper trail in case you decide to take legal action later.

Put it in the mail. Check the credit bureau’s site for further instructions and mailing addresses. Send disputes by certified mail and ask for a receipt to confirm delivery.

Give yourself enough time. The credit bureau must review your request and issue a response, but it may take up to 45 days to get back to you. While it’s likely to be a lot quicker, Ulzheimer says, you don’t want to wait until just before applying for a mortgage or car loan to sort things out.

When you receive a response from the credit bureau, the response will tell you whether the disputed item has been removed, corrected, or remains the same. It basically comes down to whether or not the bank or lender agrees with you – see, the credit bureau passes them everything you sent and asks them to accept or reject the requested change. What they say usually goes.

If you’re having trouble fixing something, it may be because:

Your dispute lacked sufficient evidence or explanations. If so, and you think you can make a stronger case, go ahead and file another dispute. There’s no limit to how many times you can file – but if you start bombarding them with the exact same dispute they’ve already refused, legally they may consider it ‘frivolous’ and start stalking you. ignore.

The bank or lender disagrees with you. Let’s say you dispute an account you don’t recognize. If the bank agrees that the account is not yours, they will ask the office to remove it from your report. But if the bank thinks the account is yours, it will likely stay on your report.

Your account has been confused with someone else’s. If you dispute accounts or debts that don’t belong to you, your record could be confused with someone else’s, perhaps because of a name and address or security number similar social. It’s a different ball game. The lender can’t clear things up because it’s usually the credit bureau’s fault, Ulzheimer says, noting that errors occur when their automated system tries to match millions of pieces of information with the correct credit records. Even if you get weird information deleted at some point, it can still show up. Alternatively, if you think the errors signal identity theft, contact the credit bureau immediately and ask them to put a fraud alert on your record to limit further damage.

See also: 5 Common Credit Score Myths That Could Be Costing You Money

Although you should always start with a dispute with the credit bureau (this is a prerequisite in case you decide to take legal action), there are other steps you can take. For example, you can send a dispute directly to the bank or lender that got the information wrong in the first place. Use this letter model and include all the same documentation. If they agree with your dispute, they should send a correction to the credit bureaus.

You can also file a complaint with the Consumer Financial Protection Bureau. This information is passed to the credit bureau, which must respond to both you and the CFPB. Since credit bureaus are regulated by the CFPB, they may have an incentive to resolve the issue quickly.

Worse is worse, if you don’t fix mistakes, hire a lawyer who specializes in the Fair Credit Reporting Act and sues the credit bureau and the lender. Since this can be costly, first consider the impact the mistakes have had on your financial life, such as your ability to get a job, mortgage, or credit. If you’re not applying for credit anytime soon, remember that bad information usually leaves your report after seven years.

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