When you check your credit report, you may find inaccurate information. You must dispute these wrong items to repair your credit. If you fail to dispute them, wrong entries on your credit report might lower your credit score.
This is not what you want. After all, a higher credit score would be useful when you need it
Why do errors occur on your credit report?
Inaccurate information can appear on your credit report for two reasons.
- There could be printing problems in your credit report that caused the negative entries to appear in the first place.
- Your creditors could be reporting incorrectly. The credit bureaus rarely double-check any of the information provided by your creditors.
They make your credit report based on the assumption that they are correct.
What happens next…
If you were not late for payment but your creditor recorded it as late, it will appear on your credit report as of late payment and lower your credit score.
If the reporting is incorrect, you can dispute it with the credit bureaus and get it corrected. However, if it isn’t, the item will remain on your credit report, and your credit score will remain unchanged. When you dispute wrong items, you usually have 30 days to respond to the creditor that reported it.
If they don’t answer within this time, the credit bureau will delete the negative entry from your report.
Why is it vital to dispute credit report errors?
In a nutshell, a false credit report equals a poor credit score. It creates many difficulties in obtaining loans and applying for credit cards.
Finding a suitable job or a rental property can be challenging as well. It is usually advisable to dispute errors as soon as possible, no matter how minor they may appear.
If you apply for credit and your credit report contains wrong information, any creditor or lender will hold you liable for it. Here’s how you can dispute mistakes on your credit report.
1. Order copies of your credit reports
Order copies of your credit reports from each of the three main credit bureaus, including Experian, TransUnion, and Equifax.
This will help you understand your credit score. Every year, you will receive one free credit report from each of the three credit bureaus. Check thoroughly to identify any errors.
2. Identify items you want to dispute
When you receive your credit reports, go over them and mark any negative entries that are incorrect. You must back it up with the necessary papers listed on the dispute form.
You can explore the instructions, after which they’ll let you know if the negative item has been eliminated.
3. Gather documents
Make sure you have documentation that supports your claim and create copies of them.
4. Write a letter to the credit bureaus
You should send the letter via registered mail stating your name, address, and your social security number to the credit bureaus. Explain in detail why you are disputing a specific item.
5. Send all documents in a proper way
You should enclose all copies of documentation that supports your claim along with the letter. Make a copy of the letter and keep all the original documents safe in your home so that you can produce them whenever needed.
6. Ask your creditors to verify
You should keep a record of the name of the bank, collection agency, or creditor who has left a negative comment on your credit report. You have the right to demand proof that the debts they are displaying are yours, as well as information on how they computed your overdue balance.
Contact your creditor, who you think has given the inaccurate information directly. This will help to speed up the process. You should also send a copy of the letter and documents to the creditor via registered mail. If you are right, and the creditor responds soon, the negative item can be removed from your credit report shortly.
7. Check your credit report
You should check your credit report after 30 days. Credit bureaus have to conduct their investigation within the time frame of a month. When the 30 days have passed, you should re-check your credit report to see whether they have removed the negative item. This period of 30 days starts from the time the credit bureau received your letter.
8. Send a reminder to the creditor
You can send them a reminder letter if they don’t respond within 30 days.
If the creditor does not respond to your letter, you can file a complaint with the FTC about the unfavorable listings on your credit reports that they have generated.
9. File a complaint with the Federal Trade Commission
You have the right to get all information of any outstanding debts that debtors claim you have. If the debt is not yours, you can ask to remove the wrong information from your credit report. If they refuse, file a complaint with the Fair Debt Collection Practices Act.
10. Know your rights
You have the right to contest any error on your credit report under the FCRA (Fair Credit Reporting Act). You should hear back from them within 30 days of receiving your letter.
Conclusion
If the credit reporting agency does not respond to your dispute letter within 30 days, they violate the Fair Credit Reporting Act. If things get out of hand, you can sue them.
Your credit report contains information about your credit history and creditworthiness. It contains your name, address, credit history, trade information, and social security number.
When you contact a lender or a financial institution to get a new line of credit, your credit report will be the first thing scanned and analyzed. Furthermore, FICO uses this credit report information to construct your credit score. As a result, you can probably guess how significant your credit report is.
A credit report with inaccuracies indicates a poor credit score. This means you’ll pay higher interest rates on loans and have a lower credit limit on credit cards. It is advisable to dispute errors as soon as possible, no matter how minor or insignificant they may appear.