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The information in your credit reports is what’s used to create your credit scores, so you don’t want to let mistakes on your credit reports potentially throw your credit scores out of whack.
An FTC study released today shows that one in five consumers have errors on their credit reports and 5% of consumers have errors serious enough that they could result in less favorable loan terms.
“These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics, in a statement. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
Here’s how to dispute credit report mistakes, step-by-step:
Make sure you have fairly current copies (ideally, less than 60 days old) of your credit reports from all three major credit reporting agencies (CRAs), Equifax, Experian and TransUnion. Since these agencies don’t share information with one another, you can’t assume that the same mistakes — or lack of them — appear on all your reports.
Sounds straightforward, right? But you have a couple of choices to make here. The first is whether to dispute the item with the credit reporting agency (or agencies) whose report(s) shows the error, or with the company that is furnishing that information to the CRA (the “furnisher.”)
Dispute the mistake with each of the credit reporting agencies that are reporting the inaccurate information if:
Dispute the mistake with the furnisher if:
Note, though, that you always must dispute the item with the credit reporting agencies that are reporting it before you can sue for credit damage. For that reason, some consumer law attorneys recommend sending a dispute to the CRAs and filing a copy of that dispute with the furnisher.
Your second choice is whether to dispute the item online or by mail. Filing online is fast and easy, and you don’t have to spring for a stamp, but you’ll want to make the extra effort to mail your complaint if:
Always send written disputes by certified mail, return receipt requested, and keep a copy for your records. You may even want to get your letter notarized if you want the CRA’s attention.
The CRA or furnisher has 30 days to get back to you with a response. If the information is corrected or deleted, skip to step six. If not, go to the next step.
If you are told the information is correct, but you know it’s wrong, you’ll need to escalate your dispute. Send a letter to the CRA and/or furnisher stating why you believe the conclusion is wrong, and CC: the Better Business Bureau, your state attorney general and the Consumer Financial Protection Bureau. Send copies of your dispute to those agencies.
If your attempts to fix the problem don’t work, then you may want to talk with a consumer law attorney with experience in consumer credit disputes. The website of the National Association of Consumer Advocates is a good place to start.
Put all your records of your dispute (copies if your credit reports, letters of correspondence, printed copies of emails or online responses, etc.) into a file and put it in a place where you can get to it if the same data appears on your file again.
At a minimum, you can order your credit reports for free once a year, and use a credit monitoring tool (our Credit Report Card gives you two free credit scores and is a good way to keep tabs on things). If you monitor your credit reports and scores closely, you’ll be alerted quickly to any problems. Credit reporting agencies are not supposed to reinsert items that were deleted as the result of a dispute without notifying you first, but it can happen.
For more Credit 101, check out these posts:
Image: eyeliam, via Flickr
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