Building an excellent credit score has a lot to do with how you pay your loans and the type of reviews your lenders give. However, along the journey, you may face challenges, including poor ratings and reduced credit limits. These may be caused by credit report errors made by your credit bureaus. In such cases, you need to identify the mistakes and open disputes to fix the mistakes and maintain a clean credit history.
To fight an error in your credit report, you need to follow these simple steps. These include checking for errors on each word from the major credit bureaus like Experian, Equifax, and Transunion, gathering all supporting documents, reviewing the investigation results, and updating your credit report. You can also contact the data furnisher or Consumer Financial Protection Bureau (CFPB) if you are unsatisfied with the results.
What is a credit report?
First, before correcting any mistake on your credit report, you need to understand what it is and how it works. A credit report is a statement that contains information about personal credit activities and current credit account status. It shows your credit history, credit limits, and how you have been paying your loan. Lenders usually use these credit reports to decide if you will qualify for loans and the interest rates they charge you.
A person may have one or more credit reports. This usually happens when you have more than one credit account or when different credit bureaus produce separate reports. A general credit report contains the following information:
- Personal information, i.e., names and nicknames you may have used, addresses, date of birth, social security, and phone numbers.
- Credit account information includes historical and current credit accounts, including revolving, mortgage and installments, account balance, creditor’s name, payment history, and credit amount.
- Collection items or public records such as bankruptcies, foreclosures and liens, and inquiries.
Common credit report errors
Credit report errors are classified into four categories: balance errors, inaccurate information on account status, identity errors, and data management errors. These errors are broken down into the following:
Balance errors
- Incorrect credit limits of the account
- The current balance in the report is incorrect
Incorrect account information
- A single debt is duplicated.
- No correct record of the last payment
- Negative information such as late payments and collection accounts that are expired. Such information should automatically fall off your credit report after seven years.
- Delinquent
- Closed accounts are listed as open
Identity errors
- A wrong name, address, and phone number.
- Credit accounts that do not belong to you which may lead to identity theft.
- Accounts belonging to another person with a similar name.
Data management error
- Insertion of previously reported inaccuracies that did not update or errors that were fixed that appear on new reports
- Multiple accounts appearing at the same time, which has distinct creditors.
Fixing credit report errors
To ensure that the credit report error is fixed within the shortest time, you need to contact the organization’s credit information provider or bureau that provided your credit information. Both lenders or data furnishers and bureaus are the ones responsible for the collection of either incomplete or wrong information in your credit report, as stated in the Fair Credit Reporting Act.
After financial amendments due to Covid-19, you should be aware that you can now check your credit report online by visiting Credit Sesame or annualcreditreport.com. In addition, credit reporting agencies also allow you to file your disputes online, through emails, or by calling them directly. For instance, currently, Experian accepts online submissions only.
Start by informing the credit reporting agency of the information that you see as wrong. Within 30 days, the organization will investigate according to your complaints. Note that investigations are done only if your complaints are not considered frivolous. You should include file copies of documents supporting your position. After posting your personal information, your communication should contain the following essential areas:
- Clarification and identification of each error in your credit report
- Outline the facts and explain the reason why you are disputing the information
- Request for correction or deletion
You may need to enclose a copy or copies of your credit report containing questions that are circled.
If you are mailing the letter, make sure you send it via a certified email. Return the receipt that is requested so that you will document what the bureau did and receive correspondence. Keep several copies of the dispute letter and the enclosures. Suppose you need help during disputing mistakes about your credit report. In that case, you can reach for myFICO, which will help you write a complimentary letter in minutes.
Next, write to the appropriate information provider or data furnisher explaining that you disputed information to the bureau. Include several copies of documents supporting your position. A lot of lenders specifically address disputes. For example, suppose the providers report the same credit report to the bureau. In that case, a notice of the dispute must be included for clarity. Request a copy from the provider in correspondence to the bureau. This should also take about 30 to 90 days.
Globally, you will receive a free credit report from the bureau directly. Once the dispute has been stated, verify the updated information and contact the relevant bureau to know if you qualify for the service. You can also ask the credit bureau to communicate to all lenders that received a false credit report within the past six months.
How accepted disputes affect your score in FICO
Typically the FICO score will increase when the errors in the credit report are corrected on time. However, in most cases, your overall score may not improve even when the disputed information is either fixed or deleted. For instance:
- Deleting negative information in your credit report may likely not impact the FICO score that you were expecting. There might be additional negative information that remains, which will hinder immediate increment in your credit score.
- Some feel closing a credit card will remove it from credit reports and maximize your FICO score. However, this is far from the truth. Closure of the bill won’t do away with it from your credit report. It will also not prevent credit history from displaying hence considered in your fico score.
- FICO scores will only consider information related to a credit report. If you change personal information, be sure that the credit information will not affect your fico score. FICO score usually considers collection credit account and public information.
It will take about 30 to 45 days for the bureau to respond to your dispute.
In case you disagree with the bureau’s investigation of your disputes:
Investigations done by the credit bureau aren’t in favor of any individual. However, if the analysis was done so, inquire from the credit bureau informing them to include future posts and the statements of dispute files. Although there is a fee charged, the credit bureau will deliver a copy of your report to anyone who received your information in case you request it.
A notice of dispute must be included if you inform the provider that you are disputing an item. This will be crucial during the investigation. For example, suppose you feel that the bureau produced wrong information about your dispute. In that case, the problem lies with the information that you provided to the bureau. As a last resort, you can hire a lawyer to help you.
The bottom line
The secret of success is tenacious and vigilant when reviewing, correcting, and repairing credit reports. Suppose the bureau produces the investigation results you aren’t content with. In that case, it is advisable to dispute it immediately and correct credit report errors. Failing to do so will lower your credit limits and deny you the chance to win higher loans in the future.
Rose Rosie is a writer for the personal finance website, Joy Wallet, which provides readers with useful information, resources, and tools to help maximize their financial fitness.
