Correcting Errors on Your Credit Report
Your Credit Score Really Does Matter
Your credit score – those three, little, seemingly insignificant numbers – has a major impact on your life. Not only does it determine the interest rates you pay on loans or credit cards, more and more companies are using your credit score to grant or deny other amenities, like cell phone contracts or life insurance policies.
If you’ve never checked your credit report, now is a good time to do so. Errors that you’re unaware of could be preventing you from getting the terms on a wide range of services.
In fact, this situation is more common than you might expect: It’s estimated that as many as 80% of credit reports contain errors. These errors range from being relatively minor in nature (for example, a misspelled name or a former address) to being much more serious, (as in the case of accounts mistakenly reported as past due or in default). Fortunately, you can correct these errors, but it does require some paperwork on your part.
Step One: Identify the Errors
As you might expect, the first step in correcting errors on your credit report involves finding them. Legally, you’re entitled to a free copy of your credit report from each of the three credit bureaus – Equifax, Experian and TransUnion – once every twelve months. To request these, visit www.AnnualCreditReport.com. This is the only site that offers legitimate free copies of your report. Other sites, including those run by the bureaus themselves, will charge you either by the report or for ongoing credit-monitoring services.
Step Two: Notify the Credit Bureau
If you find a mistake any of your credit reports, the next step is to notify the bureau in writing. When submitting your dispute, be sure to include any background materials that support your claim, in addition to your written explanation of the situation. The agency must investigate your dispute within 30 days of receiving it and notify you in writing of its decision. If the agency decides in your favor, it is also required to correct the report and send you a copy of your revised credit history.
Step Three: Add a Consumer Note to Your Credit Report
Depending on the nature of your dispute, the credit agency may decide against your claim. This can occur if the agency doesn’t have sufficient evidence to support your claim, or if there was a genuine mis-communication between you and the lender. Whatever the reason, you aren’t entirely out of luck. Consumers are allowed to add brief statements to their credit histories to explain their versions of disputes. For example, if a late payment was due to a job loss or an unforeseen medical bill, a note explaining the situation may be enough to convince a lender of your creditworthiness.
To submit a consumer note to one of the credit bureaus, follow the same procedure described above for disputing items on your report. Draft your statement (be sure to keep it short – most of the bureaus will print a maximum of 100 words) and send it in writing to the bureau. The bureau is required to send you an updated copy of your credit report with your consumer note added. Review the updated version to ensure that everything on your credit report is accurate and up-to-date.