If you’ve ever had to borrow money to buy a home, take out a car loan, or start a new business, you probably know just how important your credit score is. With a top-notch credit score, it’s far easier to qualify for the ideal loan. On the other hand, poor credit can leave you stuck with higher interest rates, or even dash your hopes of qualifying for a loan altogether.
That’s why it’s crucial to keep a watchful eye on your credit score – and your credit report. By checking your credit information regularly, you can monitor your score for positive and negative changes, spot evidence of attempted identity theft right away, and even uncover and reverse mistakes on your report.
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According to the Consumer Financial Protection Bureau, finding an error on your credit report is a fairly common occurrence. Whether due to false reporting or human miscalculation, these errors can wreak havoc on your credit score if not disputed right away. As the CFPB notes, commonly cited mistakes can include:
- Errors made surrounding your identity
- Accounts belonging to someone else, commonly with a same name, winding up on your report
- Fraudulent accounts on your report as a result of identity theft
- Closed accounts reported open
- Accounts falsely reported as late or delinquent
- Incorrect dates or details
- Data management and processing errors
- Balance errors
The best way to keep any incorrect information from sticking to your report is to check your full credit report every year at the very least. Fortunately, AnnualCreditReport.com allows you to access a full credit report from each of the three credit reporting agencies – Experian, Equifax, and TransUnion – once per year.
How to Dispute an Error On Your Credit Report
If you watch your credit closely, you should be the first one to know if any incorrect or misleading information has been reported. Hopefully you’ll never discover any incorrect information on your report. But if you do, you’ll want to dispute the error immediately.
The following steps outline the entire process of disputing an error, as explained by the CFPB.
Step 1: Draft a letter to the credit reporting agency (or agencies) showing incorrect information on your report.
Include any copies of papers or receipts that support your position, along with a copy of your credit report with the disputed items in question circled or highlighted.
You should send your letter by certified mail and keep personal copies of all papers and documentation included in the package. The CFPB offers this sample letter to use as a guide:
[Your City, State, Zip Code]
[City, State, Zip Code]
Dear Sir or Madam:
I am writing to dispute the following information in my file. I have circled the items I dispute on the attached copy of the report I received.
This item [identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.] is [inaccurate or incomplete] because [describe what is inaccurate or incomplete and why]. I am requesting that the item be removed [or request another specific change] to correct the information.
Enclosed are copies of [use this sentence if applicable and describe any enclosed documentation, such as payment records or court documents] supporting my position. Please reinvestigate this[these] matter[s] and [delete or correct] the disputed item[s] as soon as possible.
Enclosures: [List any supporting documents you’re enclosing.]
Step 2: In writing, tell the company that reported the false information that you dispute the information they reported.
Along with your letter, you should include copies of any documents or receipts that support your position. You should also send this letter by certified mail and keep personal copies of all papers and documentation included in the package.
The CFPB offers the following “sample letter” to use as a guideline when drafting your communication:
[Your City, State, Zip Code]
[City, State, Zip Code]
I am writing to dispute the following information that your company provided to [give the name of the credit reporting company whose report has incorrect information, e.g., Experian]. I have circled the items I dispute on the attached copy of the credit report I received.
This item [identify item(s) disputed by type of item, such as credit account, judgment, etc., and your account number or another method for the information provider to locate your account] is [inaccurate or incomplete] because [describe what is inaccurate or incomplete and why]. I am requesting that [name of company] have the item(s) removed [or request another specific change] to correct the information.
Enclosed are copies of [use this sentence if applicable and describe any enclosed documents, such as payment records and court documents] supporting my position. Please reinvestigate this [these] matter[s] and contact the national credit reporting companies to which you provided this information to have them [delete or correct] the disputed item[s] as soon as possible.
Enclosures: [List the supporting documents you’re enclosing.]
According to the CFPB, the provider who made a false report is required to alert the credit reporting agency (Experian, Equifax, or TransUnion) about your dispute. If your claim is proven to be correct, they must also inform the credit reporting agency so they can update your credit report with the correct information.
After the Dispute: What Happens Next
According to the CFPB, the credit reporting agency in question generally has 30 days to complete an investigation of your claims. During that time, they are required to forward any information they uncover to the organization that reported the false information in the first place.
The organization that made the false claim must complete their own investigation upon learning of the dispute. After completing their inquiry, they must report all of their findings back to the credit reporting agency in question, whether it’s Experian, Equifax, or TransUnion. And if they find the information they reported is indeed incorrect, they are then required to report their findings to all three credit reporting agencies so each of them can update your report with the correct information.
According to the CFPB, the credit reporting agency you’re dealing with must also send notices of any corrections to anyone who received your credit report in the last six months – but only if you ask. The same rule applies if you ask them to send your credit report to anyone who received a copy during the past two years for employment purposes as well.
If the Dispute Doesn’t End in Your Favor…
If the investigation doesn’t work out in your favor for any reason, and the negative or incorrect marks on your credit report still stand, you can ask that a statement of the dispute be included in your file. You may also ask the reporting agency to provide this statement to anyone who received a copy of your report in the last several months, although you can expect to pay a fee for this service.
Credit reporting agencies can only keep negative information on your report for seven years, which means any negative reporting will fall off naturally if you give it enough time. This fact may be of little consolation if you are desperate to improve your credit score in the short term, but it will ultimately help you clean up your credit if you are able to wait it out.
- Related: How to Build Good Credit
The Bottom Line
Although organizations and credit reporting agencies do their best to ensure timely and accurate reporting, mistakes do happen — all the time. Fortunately, you have the power to dispute any errors you find, and have them removed fairly quickly. However, you only possess this power if you keep a close enough eye on your credit to spot the false reporting to begin with.
That’s why it’s crucial to keep your credit report – and your score – on your radar. You may think your credit is in perfect shape, but it’s always best to find out for sure.
Have you ever disputed an error on your credit report? Did the investigation work out in your favor?