How to dispute and correct credit report errors
If your credit report contains an error, it’s up to you to correct it – the sooner the better.
A big mistake in your credit report could cost you dearly the next time you buy a car, apply for or break your mortgage, or even prevent you from getting a job, a cell phone, or an apartment.
Mistakes are more common than you might think. In 2013, the Federal Trade Commission issued a study of errors in credit reports.
It found that one in five consumers had at least one error on their credit report, and one in 20 consumers had errors large enough to charge them lower rates. Yet many consumers don’t even know there is a problem until they apply for a new line of credit and find themselves rejected.
If this has happened to you, don’t panic, experts say.
Your credit isn’t doomed, unless, of course, your credit report shows other problems, such as delinquent loans, judgments, or other defaults.
But it will take patience and persistence to clear up the legitimate questions.
“Some consumers have heard so much about the difficulty of the process that they decide they don’t even want to deal with it,” said John Ulzheimer, who has been an expert witness in more than 150 credit-related cases.
“This is a mistake because this information is used every day by lenders, insurance companies and employers to make decisions about you,” he said.
Here are the steps you need to take to fix costly credit report errors so that you can get the credit score you deserve:
1. Request your credit report
You can get a free credit report once a year from each of the three major credit bureaus – Equifax, Experian, and TransUnion – at AnnualCreditReport.com.
This is the only site where you can get the reports for free under the law – financial advisers say it’s a good idea to check your reports at least once a year.
Many other sites that offer “free” reports come with conditions.
Even if you have already obtained your report for the year, you are entitled to another free report under the law if you believe your record is inaccurate due to fraud or if you have been denied credit, insurance or employment in the past two months.
Be sure to ask for reports from all three agencies, as they often contain different information, said Ira Rheingold, executive director of the National Association of Consumer Advocates.
2. Gather the documents to support your case
If you find an error in your report, start collecting evidence to prove that the information is incorrect.
This could mean looking for a document that shows you closed an account on a specific date, or finding a voided check that shows you made a payment classified as past due.
Also carefully review your report for misspellings, incorrect dates of birth, or incorrect addresses that may indicate identity confusion.
Because agencies have loose enough match criteria to allow for data entry error, it’s common for the files of two people with similar names to end up merging, Rheingold said.
“Many people think that their identity has been stolen, but it’s often the credit bureau that mistakenly merges files, ”he said.
“All they need is seven of the nine digits of your Social Security number and a similar name.”
3. Write a clear and complete protest letter
You can start with this letter template of the FTC, but if possible, include even more information.
Clearly identify each item in your report that you dispute, explain why you dispute the information, cite any supporting documentation attached, and request that the item be removed or corrected.
“Litigation must be specific,” said Rod Griffin, director of public education for Experian. “For example, it is important to state ‘the account is not mine’, or ‘the account payment has never been late’ or ‘the account is fraudulent’.”
Leonard Bennett, a consumer lawyer in Newport News, Va. Who helps clients correct credit errors, recommended including a copy of your credit report, with each error highlighted and circled, as well. as copies of all supporting documents
He also suggested having your letter legalized and providing a copy of your driver’s license and utility bill as proof of your identity.
“Very often, bureaus dismiss a dispute simply because they conclude they need more identification,” Bennett said.
4. Avoid the online complaint form
You might be tempted to use the office’s handy online dispute form, but experts say it’s not a good idea.
The online form forces you to choose from a list of specific issues that may not match your scenario, leaves only limited space for explanation, and generally receives less attention than a written complaint.
“In almost all cases, online disputes are handled only by a computer and without human review,” Bennett said.
In addition, if you send your letter by registered mail with acknowledgment of receipt, you can prove that it was sent and received.
If the error shows up on reports from all three credit bureaus, Ulzheimer and Rheingold recommended sending a separate complaint to each, although they are supposed to inform each other of any errors they find.
Reporting offices are also required by law to forward your information and complaint to the bank or debt collector who reported the debt (often referred to as “the vendor”), who is required to do their own investigation.
Until recently, offices simply required employees to read your letter and summarize it into a two or three digit computer code and a brief summary of your complaint, and forward it to the supplier.
They now have a new system that allows them to forward your complete complaint letter and attached documentation, but experts say it’s always a good idea to send a fourth copy of your complaint to the supplier yourself for get his attention and make sure he sees everything. .
5. Keep a written record, wait for a response
Under the Fair Credit Reports Act, bureaus are required to investigate allegations of error. But how much they are investigating is unclear.
“We have seen many reports that they spend 3-5 minutes per conflict,” Rheingold said.
“They have this automated system where you send a dispute, it’s turned into a computer code, sent to the vendor, and then it’s kind of sent back to you by a parrot in denial, and nothing is really investigated or resolved,” he added.
The law gives offices 30 to 45 days to respond, but because the process is so automated, most consumers receive a response within weeks.
In the meantime, be sure to keep your papers and keep them organized.
“If you end up having to go to court, you have to be well researched,” Ulzheimer said.
“Create a file, keep copies of all your supporting documents and all correspondence to and from each office. “
If the office makes a correction to your report as a result of their investigation, they should send you a free copy of your new corrected report.
You can also ask the office to send correction notices to any business that received your report in the past six months.
6. What to do if your complaint is dismissed
If your correction request was denied, you still have options. You have the right by law to file a 100-word written statement of dispute that will be included with your credit report, so that anyone who accesses your report can read your side of the story.
You can also file a complaint with your state’s attorney general’s office and with the Consumer Financial Protection Bureau (CFPB).
“This can be helpful because the CFPB has regulatory power over news bureaus, and the fines they’ve imposed on other companies have been colossal,” Ulzheimer said.
“Agencies have no interest in being on the wrong side of a CFPB fine. So it’s like bringing your bigger and stronger brother into battle.
If this is a serious mistake, you may want to consider hiring a lawyer to handle your case. You can find an attorney experienced in these types of cases from the National Association of Consumer Advocates.
Keep in mind that by law, you must file a formal complaint with the credit bureaus before you can take legal action.
Most lawyers take these cases on an emergency basis, so it shouldn’t cost you anything. In some cases, the damage can be enormous.
A jury awarded an Oregon woman $ 18 million for an error that the credit bureau allegedly failed to correct despite two years of complaints, though a judge later reduced that amount to 1. $ 62 million.
“Keep in mind that most of these cases are settled out of court for a small amount of money,” Ulzheimer said, “but for most people that’s okay. really, after all, your report is corrected.