Disputing credit report errors - the necessity and the process

We are all aware of the credit report and that it a document that is used extensively when it comes to deciding whether we can receive a loan, credit or mortgage. However most of us are not generally aware of the information that is present in the report and how the details are collated. The importance of the report comes to our notice only when a loan application is rejected.

A credit report contains personal details like name, place of residence and income. It also contains details of how you make your payments, legal history, and financial details about whether you have ever filed for bankruptcy. These credit reports are sold to financial institutions like banks, insurance companies and even corporate companies that are looking at hiring you.

It is foolhardy to assume that since the report is governed by the Federal Fair Credit Reporting Act (FCRA), it cannot have errors. In a cyber world, identity thefts have become common and there is a high chance that someone may have used your Social Security Number or your credit card number to make some purchases or take some loans on your name. If the loan taken under your identity shows that the installments have not been paid, it will generally be recorded in the credit report as a black mark. These errors are something that we can ill afford since the credit reports are used by the receiving entities to check on various aspects. The need to check the credit report arises due to the fact that these reports are used for:

Deciding whether your loan, mortgage or employment is confirmed or not.
Calculating the rate of interest that you will be charged for the loan or credit that you have applied for. Note that a bad credit score results in a higher interest.
Verification of the personal details that you may have provided in the loan or credit application.

In almost all cases the fate of your application depends on how good the credit is. And therefore it is a good idea to periodically ask for your credit report and go through it carefully to ensure that all that has been reflected is accurate and correct. If you want your credit report, all you need to do is to go to Free Credit Report page and request for one.

After you have received your personal credit report, go through it and mark any errors that you spot. Make sure that the errors are genuine and that you have not forgotten some transaction that you have made in the past. Under the FCRA, the reporting company and the information provider (like credit card companies, banks, mortgage companies etc) are required to correct the information once it has been proven that the data provided in the report is incorrect.

What you need to do is this:

Write to the consumer reporting company and mention the errors in the report clearly (a template of such a letter is appended). Ensure that you point out each and every error that you are disputing.
Make sure that you attach the relevant documents to prove your point.
Ensure that you attach only copies of the original documents and not the original.
Make a formal request for the information to be deleted or modified or corrected, as the case may be.
It is a good idea to enclose a copy of the credit report with circles or highlights on the data that you are contesting.
Another precautionary step that you must take is to send your letter through certified mail along with a request for a return receipt.
If your claims are found genuine, you can also ask for the details of the information provider that provided this inaccurate information in the first place.

There is a process that the reporting companies have to follow on receipt of such communication.

It is mandatory for the reporting companies to investigate such cases further to evaluate the claim made by consumers. In most cases, they are expected to resolve the case within 30 days of receipt of the letter.
It is also incumbent upon them to them to send back all the inaccuracies that you have pointed out to the source entity that provided the data in the first place.
These source information providers then review and analyze the data to decide whether the claim is genuine or not. The results of the investigation are then sent back to the reporting company.
In case your claim is found to be accurate, it is the responsibility of the reporting company to send this information to all reporting companies so that the data can be corrected.
A new report needs to be generated and sent to you (free of cost, of course) and the same report should also be sent to all those entities that have received your credit report in the last 6 months.

In most cases, such cases are resolved. However, in some cases, the dispute remains unresolved for a long time. In such cases, you can demand that the dispute be filed in your records and be provided to anyone who seeks your credit report. However, you may have to pay a fee to ensure that this is done each time someone asks for your report.

Another way in which you can ensure that your credit report looks good is to ensure that all your accounts are mentioned. Though most of the large departmental stores and national banks supply this information to reporting companies, there are still some that are out of the purview of the reporting companies. Local travel, entertainment or local retailer may not be supplying this information to the reporting companies on a regular basis.

It is a good idea to visit your credit report periodically and add the accounts that do not feature automatically. This will avoid a situation where you are denied a credit due to 'insufficient credit file' or 'no credit file'.

If you are unfortunate to have some negative information on the credit report that is accurate, only time can ensure the removal of such elements. Regular negative information is likely to last for seven years in a report and bankruptcy information will last up to ten years. An unpaid judgment can be reported in your records for seven years or the statute of information, whichever is longer? Criminal records can be shown in these reports forever.

Slicemypayments is a company that provides helpful support to consumers who are looking for financial assistance on credit cards. For more information please visit www.slicemypayments.com.

Sample letter to reporting company

Date:
Name
Address (with accurate details on street number, city, state, zip code)

Name of company
Full address

Dear Sir / Madam,

Re: Credit report dated:

This letter is to state that I have discovered certain inaccuracies in my credit report (Social Security Number: _____). I have enclosed the credit report and circled the data that I deem inaccurate.

The items ______, _______, ________ are inaccurate and I request you to please verify this with the source company. I request you to please remove / modify / correct based on the proof of claim enclosed.

Request you to take immediate and corrective action on this.

Sincerely,

Your signature
(Your name)

Enclosures: < detail out the enclosures that you are sending along with the letter>

Disputing Errors on Credit Reports

Your credit report contains information about where you live, how you pay your bills, and whether you’ve been sued or arrested, or have filed for bankruptcy. Credit reporting companies sell the information in your report to creditors, insurers, employers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home. The federal Fair Credit Reporting Act (FCRA) promotes the accuracy and privacy of information in the files of the nation’s credit reporting companies.

Some financial advisors and consumer advocates suggest that you review your credit report periodically. Why?

Because the information it contains affects whether you can get a loan — and how much you will have to pay to borrow money.
To make sure the information is accurate, complete, and up-to-date before you apply for a loan for a major purchase like a house or car, buy insurance, or apply for a job.
To help guard against identity theft. That’s when someone uses your personal information — like your name, your Social Security number, or your credit card number — to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

How to Order Your Free Report

An amendment to the FCRA requires each of the nationwide credit reporting companies — Equifax, Experian, and TransUnion — to provide you with a free copy of your credit report, at your request, once every 12 months.

The three nationwide credit reporting companies have set up one website, toll-free telephone number, and mailing address through which you can order your free annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281

Do not contact the three nationwide credit reporting companies individually.

You may order your reports from each of the three nationwide credit reporting companies at the same time, or you can order from only one or two. The FCRA allows you to order one free copy from each of the nationwide credit reporting companies every 12 months.

You need to provide your name, address, Social Security number, and date of birth. If you have moved in the last two years, you may have to provide your previous address. To maintain the security of your file, each nationwide credit reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment. Each company may ask you for different information because the information each has in your file may come from different sources.

Other situations where you might be eligible for a free report

You’re also entitled to a free report if a company takes adverse action against you, such as denying your application for credit, insurance, or employment, based on information in your report. You must ask for your report within 60 days of receiving notice of the action. The notice will give you the name, address, and phone number of the credit reporting company.

You’re also entitled to one free report a year if you’re unemployed and plan to look for a job within 60 days; if you’re on welfare; or if your report is inaccurate because of fraud, including identity theft.

Otherwise, a credit reporting company may charge you a reasonable amount for another copy of your report within a 12-month period. To buy a copy of your report, contact the three credit report companies:

Experian-1-888-397-3742
www.experian.com

TransUnion-1-800-916-8800
www.transunion.com

Equifax-1-800-685-1111
www.equifax.com

Correcting Errors

Under the FCRA, both the credit reporting company and the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company) are responsible for correcting inaccurate or incomplete information in your report. To take advantage of all your rights under this law, contact the credit reporting company and the information provider.

Step One

Tell the credit reporting company, in writing, what information you think is inaccurate. Use our sample dispute letter. Include copies (NOT originals) of documents that support your position. In addition to providing your complete name and address, your letter should clearly identify each item in your report you dispute, state the facts and explain why you dispute the information, and request that it be removed or corrected. You may want to enclose a copy of your report with the items in question circled. Send your letter by certified mail, “return receipt requested,” so you can document what the credit reporting company received. Keep copies of your dispute letter and enclosures.

Credit reporting companies must investigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all the relevant data you provide about the inaccuracy to the organization that provided the information. After the information provider receives notice of a dispute from the credit reporting company, it must investigate, review the relevant information, and report the results back to the credit reporting company. If the information provider finds the disputed information is inaccurate, it must notify all three nationwide credit reporting companies so they can correct the information in your file.

When the investigation is complete, the credit reporting company must give you the results in writing and a free copy of your report if the dispute results in a change. This free report does not count as your annual free report. If an item is changed or deleted, the credit reporting company cannot put the disputed information back in your file unless the information provider verifies that it is accurate and complete. The credit reporting company also must send you written notice that includes the name, address, and phone number of the information provider.

If you ask, the credit reporting company must send notices of any corrections to anyone who received your report in the past six months. You can have a corrected copy of your report sent to anyone who received a copy during the past two years for employment purposes.

If an investigation doesn’t resolve your dispute with the credit reporting company, you can ask that a statement of the dispute be included in your file and in future reports. You also can ask the credit reporting company to provide your statement to anyone who received a copy of your report in the recent past. You can expect to pay a fee for this service.

Step Two

Tell the information provider (that is, the person, company, or organization that provides information about you to a credit reporting company), in writing, that you dispute an item in your credit report. Use this sample dispute letter. Include copies (NOT originals) of documents that support your position. If the provider listed an address on your credit report, send your letter to that address. If no address is listed, contact the provider and ask for the correct address to send your letter. If the information provider does not give you an address, you can send your letter to any business address for that provider.

If the provider continues to report the item you disputed to a credit reporting company, it must let the credit reporting company know about your dispute. And if you are correct — that is, if the information you dispute is found to be inaccurate or incomplete — the information provider must tell the credit reporting company to update or delete the item.

About Your File

Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to credit reporting companies: some local retailers, credit unions, travel, entertainment, and gasoline card companies are among the creditors that don’t.

When negative information in your report is accurate, only the passage of time can assure its removal. A credit reporting company can report most accurate negative information for seven years and bankruptcy information for 10 years. Information about an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. There is no time limit on reporting: information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance. There is a standard method for calculating the seven-year reporting period. Generally, the period runs from the date that the event took place.

For more information, see How Credit Scores Affect the Price of Credit and Insurance.

This article was previously available as How to Dispute Credit Report Errors.

Tagged with: credit report, dispute