How To Fix Errors on Your Credit Report — An Overview

Your credit score and by extension, your credit report play an important part in almost everything you do. Whether it’s getting qualified for a new mortgage or trying to rent an apartment near the school you want your child to go to, errors on your credit report can significantly impact your options and finances going forward. To ensure you’re getting the best possible deal it’s important to keep an eye on what’s on your credit report and - if you find any errors - update and correct the information it contains.

Who Issues Credit Reports?

Credit reports are issued by numerous companies, however, the three major credit bureaus reporting consumer data are Equifax, Experian, and Transunion. Because of the Fair Credit Reporting Act (FCRA), you are entitled to one free copy of your credit report every 12 months. You can obtain your free report from all three credit reporting bureaus here. Before you get access to your free credit report, you’ll have to prove your identity by providing personal information which includes your legal name, date of birth, social security number, and your current address if you have lived there less than two years. To avoid identity theft, you will also need to answer security questions. Once you complete the form, you will be able to see your credit file instantly.

What Goes in a Credit Report?

Your credit report has a lot of important information about you. For example, your credit report will list your name, including similar names you used when you applied for credit. Your current and past addresses, including your phone number(s) will also be listed. Your credit accounts dating back 7 years and any bankruptcy filing within the last 10 years will also appear on your credit report. All opened and closed accounts, partial account numbers, the balance, credit limit, and payment history are also detailed in your credit report. Negative items such as foreclosures or accounts that have been charged-offs and sold to collection agencies are also listed along with the contact information of the debt collector.

Is a Credit Report the Same as a Credit Score? 

Your credit report and credit score are not the same thing, but your credit score is based on the information in your credit report. That’s why it’s important to review a copy of your report every 12 months for inaccuracies that may lower your credit score. The lower your score, the higher your interest rate will be, costing you money. However, you can take steps to rebuild your credit, especially after receiving your bankruptcy discharge.

How To Spot Credit Report Errors

Now that you have obtained your credit report from the three major credit reporting agencies, Equifax, Experian, and Transunion, it’s time to look for common mistakes and errors. First, look for any inaccurate information such as your name misspelled, wrong address or date of birth. Sometimes information is mixed up with people such as parents or siblings with similar names.

Review each account listed on your credit report. All debt, whether secured or unsecured, will be listed, as well as any lawsuits and outstanding judgments. Look for accounts that may not belong to you or on-time payments that are reported as late payments. Review the account status such as open, closed, or charged-off. Make sure any past judgments that you are making payments on or settled accounts are reported correctly. 

At the end of your credit report, there will also be a section on inquiries. There are two types of inquiries: soft and hard. Soft inquiries are by companies that have searched your credit report and are considering offering you credit. Soft inquiries don’t affect your credit score. Hard inquiries indicate you applied for credit and the creditor reviewed your credit report. If you didn’t apply for credit, this could be a sign of identity theft and it should be disputed. Hard inquiries affect your credit score. If you find errors in your credit report, start to gather your evidence, such as your payment history showing on-time payments, that you can present to the credit reporting agency.

What Is Not a Credit Report Error

Credit reports contain a lot of information, so it’s important to review each section carefully. But before you dispute errors on your credit report, know that certain information is allowed per the FCRA. For example, accounts that were discharged in bankruptcy remain on your credit report. That includes judgments that can’t be enforced because of bankruptcy. Therefore, even though those accounts were wiped out because of bankruptcy, they will remain on your credit report for 7 years and the bankruptcy - showing that you’re no longer obligated to pay these debts - for ten years.

Disputing Credit Report Errors

There are several reasons why you want to fix errors on your credit report. For one, you are entitled to by law and since there are no fees involved, it’s to your financial advantage to do so. Another reason is because negative information on your credit report will lower your credit score and make you less creditworthy. The lower your credit score, the higher the interest rate you’ll be offered by potential lenders, costing you more money. So, failing to dispute incorrect information could be a costly mistake. If you’re going to file a dispute, you have the option of doing so in writing or online.

If you’re going to file your dispute in writing, your dispute letter should contain the following information:

• Your contact information (name, address and phone number);

• If there is a Report Confirmation number on your credit report, include it in your dispute letter.

• Identify the incorrect information and explain why the information is incomplete or incorrect. Make sure to include the creditor’s information, especially the account number in case you have more than one account with that creditor. Include a copy of the page of your credit report that has the incorrect information and highlight that area.

• Confirm the correct address and department you’re sending your dispute letter to. Your letter should be sent certified with a return receipt requested; that way you have proof it was received. 

For further guidance, you can review the sample letter posted on the Federal Trade Commission’s (FTC) website. 

If you’re disputing an item(s) online, the process is simpler since the credit bureau already has your information in your account. With the dispute form, you can mark the incorrect or information, and provide an explanation as well. You can even upload documents that support  your claim. When filing your dispute online, make sure the correct email address is on file and check your spam or junk mail regularly.

Documentation You May Need 

The basis of your dispute determines what documentation you should submit to the credit bureau. For example, if there is a late payment recorded, you would provide a copy of your canceled check to prove otherwise. If your account is paid in full and you closed it, a letter from the creditor should be provided. If there’s an application for credit that doesn’t belong to you, you should contact the furnisher of that information. Once the furnisher confirms you didn’t apply for credit with them, forward a copy of their response to the credit reporting agency. When submitting documents via mail, only send copies because the documents will not be returned to you.

The Process

Upon receiving your dispute, the credit reporting agency has 30 days to investigate. If the documentation you provided is sufficient to correct the inaccuracy, your credit report is updated and the investigation is complete. However, the credit bureau may need to contact the creditor for additional information. If during this time you submit more documents, the deadline is extended another 15 days. Upon the completion of the investigation, the credit reporting agency has 5 days to notify you of the results. If the disputed item is corrected, you will be provided an updated credit report free of charge.  

If you disagree with the results, you can file a statement of dispute that will appear on your credit report. You can even request that the statement of dispute be forwarded to any company that requests your credit report, however, you likely have to pay a fee for this service. 

Working With a Credit Repair Company

Another option to dispute inaccurate information on your credit report is to hire a credit repair company. However, that’s not recommended for several reasons. For one, many of these companies make promises of fixing your credit that are legally impossible. If they’re able to remove a disputed item from your credit report, sometimes it’s because the creditor didn’t reply within the required time frame. However, if the creditor provides that information at a later date, then the item will go back on your credit report. Since filing a dispute is a simple process whether done online or in written form, it may be best to handle the situation yourself, especially if there are a minimal amount of errors. If there are numerous errors on your credit report, then consult with an attorney who is experienced in handling FCRA matters.

Let's Summarize...

Since the FCRA entitles you to a free credit report every 12 months, take advantage to look for inaccuracies. Doing so will not only help you avoid becoming a victim of identity theft, but by removing negative information that doesn’t belong on your credit report, your credit score will improve. The higher your credit score, the better the interest rate you’ll receive.

But remember, your credit score is determined by your credit report. So, if your credit score is low because of late payments or you stopped paying your credit cards, filing frivolous disputes isn’t going to change that. In that case, your best option may be filing for Chapter 7 bankruptcy to wipe out your debt and get a fresh start. Remember, Upsolve is here to help you and with our guidance, you can rebuild your credit after bankruptcy.