In part 1 of our series on credit (see video here), we covered how your FICO score is calculated. In today's episode we cover how to correct errors on your credit report. As always, we've provided a recap for the paper lovers as well. Enjoy!
Step 1: look for inaccurate reports
As logical as this sounds, you’d be surprised how many people I come across who after reviewing their full credit report for the first time realize that there are issues on their credit report that were either reported incorrectly, or that they did not make at all. It’s very important that you print off all three reports to compare. Businesses make the decision to not only report your transactions to a credit bureau, but also to which bureaus they report. Since it’s possible that a transaction wasn’t reported to all three, you may print off one report and not realize there’s an incorrect item on another report that’s hurting your score with that bureau. For example, I have a Sister who for the purposes of this video will be called Jane N. Doe (to be clear, this is a true story but that’s not her name). My sister went to college in a city where there was another woman named Jane N. Doe, who was living her life making financial transactions just like she was. For years my sister could not figure out why her credit score was so low, until she printed off all her reports and realized that many of the transactions that the other Jane Doe was making were actually being reported to my sister’s score.
Check Dates On Negative Transactions
If you’ve had unpaid bills go into collections or have filed bankruptcy in the past, unfortunately there’s no way to remove them from your report other than to wait for time to pass. However, you may find a discrepancy in the date the judgment was reported that can be disputed. Negative transactions can stay on your report for seven years. Unpaid judgments stay on your credit report for either seven years or until the statute of limitations runs out, whichever is longer. Bankruptcies can stay on your report for 10 years. While a credit bureau can make their own calculations for when that period starts, it’s typically at the date it occurred. This means if you see a negative action on your report and feel that the date was inaccurately listed, or that it’s still on your report past the time period that is allowable, it’s worth disputing.
When Can I Access My Report?
The Federal Fair Credit Reporting Act actually requires all three bureaus, Equifax, Experian and TransUnion to give you one free report every 12 months, at your request. You can call them directly or request on their website. You also are able to get a free report within 60 days of being denied credit, like a car loan. You can get a free report if you’re unemployed and planning on looking for a job within 60 days, if you’re on welfare, and importantly, if you think your report is inaccurate because of fraud or identity theft.
How Do I Dispute Errors On My Report?
Each of the three bureaus should have a link on their website where you can formally file a dispute, but fortunately, you’ll only need to do this once. If you file a dispute with one bureau they are legally required to not only investigate any claims they don’t consider frivolous, but they’re also required to alert the other two bureaus of your claim. Whether you’re right or wrong, the bureau will send you a report sharing the findings of the investigation, and if it leads to any changes, they’ll also send you a copy of the new report.
If you want to go directly to the source, you can contact the person or company that provided the information to the bureau. Mail them a dispute letter that lists your information, the error you feel you’ve found, and any documents you feel support your claim. If you’re looking for a sample dispute letter, you can find one on the Federal Trade Commission’s website, www.consumer.ftc.gov. If you send the letter and that person or company decides to continue to report it, they’re required to alert the credit bureaus that you’ve disputed the claim, and if it turns out you’re correct, they’re required to contact the bureau to update or delete the error.
Now to be clear, some of the stuff adversely affecting your credit might be absolutely accurate, and for those things you may find that time is the best cure. But for anything that is actionable and worth disputing, hopefully these tips will help clean up your report in a meaningful way.