How to Dispute Errors on Your Credit Reports

One in five consumers has had an error on at least one of their three credit reports, illustrating just how important it is to check your report for mistakes. But what errors should you check for, and what should you do if you spot one?

Knowing how to locate and dispute credit report mistakes could protect your pocketbook, prevent consumer fraud and even help your job hunt.

“More employers are starting to review credit before extending offers, and no one wants to lose a job opportunity because of a mistake on a credit report,” says Maricarmen Smith-Martinez, a financial educator at CredAbility .

The good news, thanks to the Fair Credit Reporting Act  (FCRA), is that consumers are entitled by law to a free annual credit report from each of the three national credit reporting agencies, available online at annualcreditreport.com . Once you have received a copy of your credit report, check to make sure the following information is accurate and up to date:

1. Personal information, including name, address and phone number(s). Personal information can sometimes get mixed up for consumers with generational names. If you’re a junior or a third, for example, be certain your name is correct.
2. Account information. This includes, for each creditor:
3. Payment history
   b. Current balances
   c. Account age (the date the account was opened)
   d. Correct accounts listed3. Hard inquiries. This section of your credit report shows who has reviewed your credit report, a process that requires your authorization. An inquiry you don’t recognize could be a sign of fraudulent activity. Another red flag: inactive accounts that show new activity.

If you do detect errors on your credit report, consider taking the following steps:

1. Notify the credit reporting agency immediately. All three of the national credit reporting agencies allow you to file your dispute online, by phone or by mail. Sending a dispute by snail mail creates a paper trail and can make it easier to send supporting documentation. Always send paperwork via certified mail to verify receipt, and send copies of documents, never originals.
2. In addition to the credit reporting agency, immediately contact the creditor who furnished the disputed information.
3. When reporting your dispute, specifically define the issue, says Norm Magnuson,
   vice president of public affairs for the Consumer Data Industry Association. “Don’t just say, ‘I don’t owe this much,’ but, ‘My balance is $200, not $300,'” he suggests. If you are unsure of how to word your dispute letter, the FTC provides a helpful template.

Once the credit reporting agency receives your dispute:

1. It must send your dispute to the creditor or the organization that provided the information.

4. If the original creditor denies your claim, the disputed information will remain on your credit report. However, you have the right to add a 100-word statement of explanation describing the dispute in your own words. Basically, the statement is your side of the story, Magnuson says.
5. If your dispute results in a change, the credit reporting agency must give you the results in writing, as well as a free copy of your updated report.

The FCRA requires that the national credit reporting agencies respond to your dispute, usually within 30 days, unless your dispute is considered frivolous. According to Magnuson, about 75 percent of all disputes are resolved within 15 days.

A few more things to remember:

1. When making your dispute, stay calm. “While the process can be frustrating, clarity and simplicity will help more than venting complaints, which could delay the process,” Smith-Martinez says.
2. Check your credit report before you apply for new credit or a loan—this will give you a chance to resolve any errors before a new lender may see them.
3. If you want to check your credit report more often than once a year, you can always purchase more copies directly from any of the three credit reporting agencies.
4. Do your best to protect your credit. By placing a fraud alert on your credit report with any of the three credit reporting agencies, businesses will be required to get your permission before issuing credit in your name.