Did you know that a large proportion of consumers have errors on their credit reports? Unfortunately, it’s true. In 2017, the most common complaint received by the Consumer Financial Protection Bureau (CFPB) had to do with incorrect information being reported on consumers’ credit reports.
A study conducted by the FTC in 2012 found that about 25% of consumers had at least one error on one of their credit reports. Some of those consumers were paying higher interest rates on loans as a result of those errors bringing down their credit scores.
From this information, you can see that it’s all too likely that you may have an error on your credit report. Let’s go over some of the most common types of credit report errors and how to fix errors on your credit report.
The first thing you will need to do in order to identify errors on your credit report is, of course, obtain a copy of your credit report.
You can get your credit report for free from annualcreditreport.com, which is the only website authorized by the government to provide your annual free credit report.
You are legally entitled to receive one free credit report from each of the three major credit bureaus once every 12 months. You can choose to order all three credit reports at the same time or order each individual report at different times throughout the year.
Watch out for other websites claiming to offer free credit reports or free trials, especially if they ask you for payment information.
However, there are some reputable websites where you can view your credit report for free, such as CreditKarma, CreditSesame, WalletHub, and Bankrate. They are able to offer this service by advertising credit products to users.
You can also request a free credit report if you are denied credit because of information found in your credit report. The credit report must be from the credit bureau that provided the original report to the lender.
In addition, you can qualify for an additional free report if you are unemployed and planning to apply for jobs, if you receive government assistance, or if you are a victim of identity theft.
Credit experts recommend checking your credit reports at least once a year, so make sure to take advantage of any opportunities to get a free copy of your credit report.
You can also pay to get your credit reports directly from the credit bureaus.
If there are any errors on your credit report, you can contact the credit bureau that is reporting the inaccurate information to resolve the issue. Your credit report should contain information on how to file a dispute.
Although it is possible to dispute credit report errors online, many credit experts recommend instead writing a letter and sending it in the mail with documentation to verify your identity and evidence to support your claim. If you try to dispute online or over the phone, you may not have the chance to provide enough supporting evidence, and the credit bureau may dismiss your dispute as frivolous.
If there is more than one error on your credit report to deal with, it is best to send a separate letter for each dispute, since the credit bureaus may reject long lists of disputes as frivolous. It’s also recommended that you send your letters by certified mail so that you have proof that the letters have been received.
If you have a lot of errors to dispute or if you have been the victim of identity fraud, you may consider hiring a credit repair service to assist with the process. [Disclosure: This article contains affiliate links.]
In addition, it might also be a good idea to contact the credit bureaus to place a fraud alert on your account, which requires lenders to take extra steps to verify your identity if someone is trying to open an account in your name. (If you are planning to buy tradelines, be sure to have the fraud alert removed first.)
Once the credit bureau has received your dispute, they have 30 days to investigate your claim. If their investigation cannot verify the information on your credit report, they must update it with accurate information or delete the item.
You should also contact the lender that furnishes the data to the credit bureaus to ensure the inaccuracy gets corrected at the source. The FTC also provides a sample dispute letter to send to data furnishers. If you neglect this step, the error could show up on your credit report again the next time the lender reports to the credit bureaus.
If your dispute is rejected and you don’t agree with the credit bureau’s decision, you have the option of adding a consumer statement to your credit report to explain the situation. However, this is not necessarily the best solution.
Firstly, the statement doesn’t get factored into your credit score, so it won’t help your chances when a lender uses an automated system to approve or reject applicants. If it’s a case where an underwriter is looking at your credit report, adding a consumer statement may just draw their attention to a negative item unnecessarily, especially if the item is older.
Another option is to submit a second dispute with additional supporting documentation to try to get the credit bureau to investigate the dispute a second time.
Unfortunately, errors on credit reports are very common, so we all need to be vigilant about monitoring our credit for fraud and inaccuracies.
Make sure to check your credit reports regularly by claiming your annual free credit reports as well as using a reputable free service throughout the year. As soon as you spot any errors, try to get to the bottom of them and get them corrected both with the credit bureaus and with the data furnishers as soon as possible.
By making sure that your credit report only contains accurate and timely information, you are helping to protect your financial health and ensuring that credit report errors don’t stand in the way of future opportunities.