Unless you’re buying a car, financing a home, or applying for a credit card, you likely don’t obsess over your credit report. And unless you take advantage of your annual free copy, you may not even know what’s in your credit file. According to Erick Klein, of Brookings Center on Regulations and Markets, more than 1 in 5 consumers have a significant error on their credit report. In some cases, those credit report errors can make you look like a credit risk even if you’re not. What can you do if an error pops up on your file? The following 5 tips show you how the credit dispute process works.
1. Read Your Credit Report
You can’t report errors if you never view your credit file. While it might not sound like a fun thing to do on a Saturday morning, it may be the best time. You’re relaxing with a cup of Joe so why not do something productive?
How Often Should You Look at Your Credit Situation?
At a minimum, review your credit report once a year. It’s free! The experts at Credit Repair Answers say you can request one free credit report every year. Don’t settle for one report either. Request one from each of the three major credit reporting agencies:
Also, consider partnering with a credit monitoring service. Most charge a fee but when you subscribe to the service, you can review your credit file every month.
What Are You Looking For?
Checking for accuracy is the main thing you’ll do with your credit file. Since the file contains your personal information such as legal name, address, and rental history, check for spelling mistakes and correct current address. Beyond your demographic information, look for outdated information. Maybe you made a late car payment 10 years ago and it’s still on your report. You might also see an old collections account that you’ve already settled. Late payments should only stay on your report for 7 years. If you’ve paid off a collections account, your report should reflect that as well. Keep an eye out for debts that don’t belong to you. Mistakes happen and you sure don’t want bad information on your file that belongs to someone else.
2. Know What You Can Dispute
If you don’t agree with it, you can dispute it. Be aware that the credit reporting company will investigate whatever you dispute. That doesn’t mean they’ll delete the information. The law only requires the credit bureau to delete certain credit report items. Consumers are welcome to dispute the following items found on their credit file:
- Incorrect credit limits, loan amounts, and account balances.
- Accounts that don’t belong to you.
- Late payments if you paid on time.
- Past due status if your account is current.
You can also dispute out of date information. For example, negative items should only remain on your credit report for 7 years. The exception is bankruptcy. According to Credit Repair Answers, bankruptcy usually appears on the report for 7-10 years. Once you’ve identified potential errors, you’ll start the process of communicating with the credit bureaus.
3. Notify the Credit Bureaus
When you find errors, don’t ignore them. They won’t magically disappear. Instead, tell the credit bureaus. Of course, there’s a process you must follow. First, gather all documentation that supports your claim. Without evidence, you won’t get very far with the credit bureaus. Make copies of your documents. Next, you’ll write a letter.
Your Dispute Letter
If you choose to mail your dispute, you’ll need a letter. Let the credit reporting company know you have a recent credit report. Then, you’ll list each error separately with the name of the account and the account number. Don’t forget to include the account status (paid in full, current, etc.). State that you dispute the item listed and request an update, removal, or other change. List whatever documents you send, which may include cancelled checks or other proof of payment. You can include a copy of your credit report and highlight each error.
Finally, don’t just drop it in the mailbox. Send your dispute letter by certified mail and pay for the return receipt. You want to know the credit bureau received your letter.
4. Wait for Investigation Results
When you report errors, the credit reporting companies start an investigation. They’re required by law to investigate and provide their findings back to you. Be patient. It usually takes about 30 -45 days. As part of the investigation, they forward your documentation to the original creditor, or collection agency. Since the creditor is the one supplying the disputed information, they also must investigate your dispute. They report their findings back to the credit bureau. If they find inaccurate information, they must alert all three major credit bureaus that we listed above. The credit bureaus then update your file with the correct information.
5. Other Ways to File Disputes
If you prefer using the internet rather than fussing with a trip to the post office, you have options!
Online Dispute Forms
You can always open a dispute online. All three credit reporting companies have online dispute centers. While there’s nothing wrong with using their online forms, the credit bureaus don’t give you much space on the form. You’ll have enough room for a brief statement. They do also allow you to attach documentation. Some consumers feel more comfortable using the mail because it’s easier to prove the credit bureau received their information.
Yes, the credit bureaus still use phones and you can open a dispute by phone with a representative. Keep in mind, at some point, you’ll still need to supply documentation.
What Happens When They Finish Investigating?
After they complete the investigation, the credit bureau gives you the results in writing. If they make a change to your credit file, you get a free copy of your report. If you ask, the credit bureau will notify anyone who received your credit report over the last 6 months.
Sometimes investigations don’t end on the side of the consumer. If you can’t resolve the errors on your credit report, you do have the option of requesting that a statement of dispute be included in your credit file.