If you take for granted that the credit bureaus and businesses who report to them are reporting your information correctly, think again.
In 2013, the Federal Trade Commission published a study that found at least one in five consumers had an error on at least one of their credit reports from the three major credit bureaus. Some of these errors are significant enough to affect consumer credit scores – the number that creditors and lenders use to make credit and pricing decisions.
The Right to An Accurate Credit Report
Federal law – the Fair Credit Reporting Act – gives consumers the right to an accurate credit report. If you spot errors on your credit report, you have the right to dispute the error with the credit bureau. The credit bureau should conduct an investigation into your dispute and correct your credit report if it finds the information is inaccurate.
While you have a right to dispute credit report errors, the process isn’t necessarily easy. Credit bureaus notoriously spend little time investigating disputes and sometimes “verify” inaccurate information even when you provide proof. Sometimes it’s because the information furnishers have your account information wrong in their systems and verify errors when credit bureaus investigate. Follow these steps to correct inaccurate credit report information.
Make sure you’re looking at a recent copy of your credit report.
Your credit report changes often, as often as daily, depending on when your creditors and lenders send updates to the credit bureaus. If you plan to dispute online, the credit bureaus will require you to have ordered your credit report within the past 30 days. Checking a recent copy of your credit report will keep you from disputing information that hasn’t already been updated.
You’re entitled to a free credit report from each of the credit bureaus once a year. You can get a free copy of your credit reports from the major credit bureaus – Equifax, Experian, and TransUnion – through AnnualCreditReport.com.
You may be entitled to a free credit report if you’ve recently been turned down for credit, you’ve been a victim of identity theft, or you’re unemployed and looking for a job soon. Otherwise, you can purchase a credit report through any of the credit bureau websites.
Check your credit report for errors.
Print a copy of your credit report so you can make notes about the accounts you find.
Read through your credit report checking for inaccurate, incomplete, or outdated information. Errors to look for include:
- Accounts that don’t belong to you, especially delinquent accounts like debt collections
- Payments reported as late that were actually made on time
- Negative information that’s past the credit reporting time limit (7 years for most negative accounts and Chapter 13 bankruptcy, 10 years for Chapter 7 bankruptcy)
- Inaccurately reported credit limits or loan amounts
- Accounts reported as open that’s closed, or vice versa
Use a highlighter to indicate items that need to be disputed.
Writing a dispute letter
All credit bureaus give you the ability to dispute errors online. You might go this route for small errors that don’t require any documentation, but watch out for arbitration clauses in online disputes. Agreeing to the terms may prevent you from suing the credit bureau if they do something wrong.
Writing a letter is the route to go for more significant errors that need explaining or additional documentation. The dispute letter doesn’t have to be fancy, but you do want to be concise, to the point, and use proper spelling and grammar.
State what you’re disputing and why the information inaccurate, incomplete, or outdated. Including a copy of your credit report with the error highlighted or circled can help.
State what you would like the credit bureau to do to correct the error. For example, you’d like the account deleted, the late payments removed, or the account opening date to be updated.
Include any evidence you have that supports your dispute. Add a paragraph to your dispute letter that describes what you’re including. For example, “Enclosed are copies of payment confirmation showing the creditor received my payment on time.”
Write the letter yourself, or at least customize any online template you find. Make sure the dispute letter you use reflects the information you’re disputing and doesn’t look like the thousands of other dispute letters the credit bureau receives.
Once the credit bureau receives your dispute letter, they have 30 days to investigate your dispute and follow up with a response. The time to investigate increases to 45 days if you send additional information.
Follow up with the information furnisher.
Ideally, the credit bureau’s investigation will result in your favor and your credit report will be updated. In this case, you’ll receive a free copy of the updated credit report. Any business that viewed your credit report within the past 30 days will be sent an updated copy of your credit report.
Disputes don’t always give you the result you’re looking for. If the credit bureau responds that the error was verified by the creditor, but you know it’s inaccurate, follow up by disputing directly with the creditor who provided the information.
The dispute process with an information furnisher is similar to disputing with a credit bureau. Write a letter detailing the inaccurate information and include any proof you have that supports the dispute.
Going Beyond the Dispute Process
You have the right to sue a credit bureau that does not properly investigate or correct your credit report errors. In 2013, a jury awarded Julie Miller $18.4 million in damages after Equifax failed to correct her credit report error, despite her multiple attempts to have the information corrected.
You can also file a complaint with the Consumer Financial Protection Bureau. The CFPB won’t directly force the credit bureau to update your information, but can facilitate a response. With enough complaints against credit bureaus, the CFPB can conduct an investigation and issue new rules that make the dispute process easier. For example, in 2014, the CFPB announced more options for sending documents that support your dispute.