Credit reporting errors are not rare computer glitches. They happen more often than you might think, and if you don’t correct the mistake it could negatively impact your credit score, leading to higher interest rates or even denials for additional credit. The good news is that you can take control by working to correct mistakes on your credit report.
The most recent study from the Federal Trade Commission found that more than a quarter of 1,001 people participating found a “potentially material error” on one of their three credit reports. Of these, about half saw a change in their credit score after challenging the mistake. Here’s how to find and change those errors and turn a negative into a positive for your credit rating.
Getting Your Credit Reports
You can’t correct an error that you don’t know exists. So the first step is to obtain your credit reports. Once a year, you can request a free copy of your report from the three major agencies — Experian, TransUnion and Equifax. It’s important to request each one. They receive information from different sources, so the reports can vary a little bit.
Among the items you’ll find on your credit reports are:
- Businesses that have extended you credit
- Businesses that have sought your credit records
- Loan amounts and credit limits
- Late payments and bad debts
- Bankruptcies or other public information
In these and other categories, look for unfamiliar information. Errors in your credit report can take many forms, including:
- A business you don’t recognize has obtained your credit information
- Payments that you can prove were on time are listed as late/missing
- Accounts are listed that you don’t recall opening
- Accounts are reported multiple times on the same report, inflating your actual debt
- Bad debts that older than seven years, which should be removed
- Your ex-spouse’s debts
You also can and should also correct mistakes in your personal information, such as misspellings or alternate spellings of your name, or incorrect addresses. These are much less likely to impact your credit score, but can be both a cause of or a sign of a potential identity theft.
Use this handy worksheet to track the errors, one sheet for each report.
Disputing an Error on Your Credit Report
Once you have identified errors and recorded them on your worksheet, it’s time to write a dispute letter. This is a necessary step before considering a lawsuit, per the Fair Credit Reporting Act, and often can solve the issue without litigation.
But writing an effective dispute letter is not a task to take lightly, for many reasons. You may be emotional — after all, it’s your credit at stake — but straying from facts into name-calling or self-pity will not help your cause. The letter also will become evidence if there is any legal action later. So be direct, polite and stick directly to facts. This is where your worksheet can help, providing a framework for the issues you want to see resolved.
If you’re still intimidated or unsure, an experienced identity theft and credit reporting lawyer can assist you in crafting an effective dispute letter that spells out exactly the steps you wish to see taken. You will sign the letter, but our consumer law attorneys will support you throughout the process.
Once complete, your letter should be sent to both the credit reporting agency and to the company that furnished the information to the agency.
Credit bureaus are legally obligated to investigate your claim. There is no timetable for doing so, but you should receive a response in about 30 days.
These responses are not always in your favor, however. Credit bureaus may deem your challenge frivolous, or decide you have not provided enough information. If your challenge is rejected, you still have a few options:
- You can write another letter disputing the credit item. In some instances, the credit bureau response will identify information or documents that you can provide to support your dispute. If you have that information, a second letter may help to get the item removed. If they credit bureau has not provided that information or if you have already provided all the information you in your possession, a second letter will not likely help.
- You can ask that your statement of dispute — your letter — be included on your credit report. Any entities that pull your credit report later will see your dispute and federal law requires them to take your dispute into account.
- State and federal consumer protection agencies may accept complaints about the credit bureau or the creditor. But, you should not file a public complaint without the assistance of a lawyer.
- Beyond that, you may consider litigation against the credit bureau or the creditor for negligent or willful non-compliance with the Fair Credit Reporting Act or other laws. You may sue for actual damages and any distress that the false reporting may have cause. If you are successful, the other side is required to pay your attorney’s fees, court costs and other related costs. Punitive damages can come into play for the most egregious violations of the law, but they are rare.
Contact a Trusted Consumer Law Attorney
For assistance with obtaining your credit report, disputing errors and challenging denials of your dispute, contact the Southfield consumer law attorneys at Lyngklip & Associates at (248) 208-8864.