How To Dispute Errors and Correct Inaccuracies on your Credit Report
Credit report errors occur more frequently than you think. As per a study commissioned by the Federal Trade Commission in 2012, about 25% of credit reports contained errors that were potentially significant.
When you have put in the effort to ensure your finances are well managed, paid off debts, and have been generally smart with your money, you do not want stupid inaccuracies on your credit report to derail your best laid financial plans.
Errors on credit reports come in all sizes and shapes and may have no, minimal, or serious impact on your overall credit profile. Given the close attention given by lenders to your credit score and report, it makes sense to ensure yours is clean and as accurate as it can be!
Why your credit score and report matter
Whenever you apply for credit, your three-digit credit score and credit report are assessed by lenders to determine your creditworthiness. The information on your credit report is used to compute your score and the higher your score, the better your chances of qualifying for credit at a competitive rate.
Generally, to build an excellent credit profile, you want to make your bill payments on time, use credit wisely, and follow these best personal finance tips.
All three major credit bureaus, Experian, Equifax, and TransUnion are obligated to provide you with one free copy of your credit report every 12 months upon request. I easily access all three of mine through AnnualCreditReport.com.
There are also several financial services company’s who offer free access to your regularly updated credit score, such as CreditKarma.
Common credit report errors
Here are some of the more common errors you should look out for when you read through your credit report.
1. Incorrect personal information: There may be mistakes in how your name is spelled, date of birth, your current and former addresses, employer information and social insurance number (SIN).
2. Incorrect status updates: It may report late payments when you have always made your payments on time. There may also be errors relating to your account balances and credit limits.
3. Outdated information: A closed account may be reported as open.
4. Identity theft: Someone else’s information may show up on your report. While this may simply be an error, you want to ensure that your identity has not been compromised and that your SIN is not being used fraudulently.
5. Negative information may remain on your credit report even after it should have been expunged following the 7-year mandatory period.
How to file a credit report error dispute
If you are like me and you regularly monitor your credit report for errors, you can save yourself from the hassles of a stolen identity or rejection by a potential lender if you take quick action.
Here are the steps you need to take to rectify those pesky errors on your credit:
Step 1: Contact the credit bureaus
Under the provisions of The Fair Credit Reporting Act, you can file a free formal dispute with the credit bureaus, and they are expected to investigate your concerns within 30 days.
Send the concerned credit bureau a letter stating what the errors are and requesting that they correct or delete them as required. Provide copies of documentation that support your claims, such as bank statements, letters from a lender, police report regarding identity theft, bankruptcy schedules, or other court documents.
A sample letter provided by the Consumer Financial Protection Bureau (CFPB) can be found here.
You can also submit a dispute online. My personal recommendation is to do both i.e. send them a letter in the mail and also complete the online dispute form.
Here are the contact details for all three main credit bureaus:
- Online dispute submission
- Mail to Equifax, P O Box 740256, Atlanta, Ga 30374-0256
- Phone them at 1-866-349-5191
- Online dispute submission
- Mail to Experian, P O Box 9701, Allen, TX 75013
- Phone them at 1-888-397-3742
- Online dispute submission
- Mail to TransUnion, P O Box 2000, Chester, PA 19016
- Phone them at 1-800-916-8800
You should always include all the relevant personal information that confirms your identity with your submission. These include your full name, address, social insurance number, date of birth, and a copy of a government-issued ID.
Send your letter via registered mail so you can confirm that it was received by the credit bureau.
Step 2: Contact the information provider
Credit reporting agencies receive information from creditors i.e. banks and credit card companies. Contact the creditor (information provider) and ask them to verify and correct the information they are providing to the credit bureaus.
Be detailed about your concern and provide all the supporting documents.
Step 3: Wait for a response
Credit bureaus generally respond to credit report disputes within 30 days or less. If you have not heard back from them within this period, give them a week or so extra and then follow up.
If the information you are disputing is inaccurate, the necessary corrections are made and an updated credit report is provided to you at no charge. Depending on the severity of the error and its impact on your credit score calculation, you may see an improvement in your credit score within a few weeks, everything else being constant.
What if your dispute fails?
Sometimes, the information you are disputing is verified by the credit bureaus or information provider as accurate and remains on your credit report. In these cases, you have a few options:
- Submit a follow-up dispute with the credit bureau and provide adequate documentation to support your claim. if no new information is provided, credit bureaus can deem your dispute as frivolous and ignore it.
- Request that an “explanatory statement” be added to your credit file. This statement is your opportunity to “tell your side of the story.” While it doesn’t impact your credit score, it is provided to any creditor who requests your credit report.
- Make a report to the CFPB.
- Lawyer up.
It is important that you routinely monitor your credit history for any errors that may be detrimental to your financial health. When you find inaccuracies, have them corrected as soon as possible.
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