Common Credit Report Errors to Look For
Even minor mistakes on a credit report can impact your financial life. Regularly reviewing your reports from all three major bureaus (Equifax, Experian, and TransUnion) is essential. You can get free copies annually from AnnualCreditReport.com.
Look for these common errors:
- Incorrect Personal Information: Misspelled names, wrong addresses, or incorrect Social Security numbers can cause identity mix-ups.
- Accounts Not Belonging to You: An account may belong to someone with a similar name or be the result of identity theft.
- Inaccurate Account Status: A common error is an account being marked as late when payments were on time. A closed account might also be incorrectly listed as open.
- Duplicate Debts: The same debt may be listed more than once, potentially under the original creditor and a collection agency.
- Incorrect Balances or Credit Limits: A higher-than-actual balance can negatively affect your credit utilization ratio, a key factor in your credit score.
- Outdated Negative Information: Most negative items, like late payments or collections, must be removed after seven years. Bankruptcies can remain for up to 10 years.
How to File a Credit Dispute Step-by-Step
The Fair Credit Reporting Act (FCRA) gives you the right to dispute errors. The process is free and can be done yourself. While credit bureaus offer online dispute portals, sending a formal dispute letter via certified mail provides a clear paper trail.
- Gather Documentation: Collect copies of any evidence that supports your claim, such as bank statements, payment confirmations, or letters from creditors. Never send original documents.
- Write a Dispute Letter: Clearly identify the item you are disputing, explain why it is incorrect, and request that it be removed or corrected. The Consumer Financial Protection Bureau (CFPB) provides helpful sample dispute letters.
- Send Your Dispute to the Credit Bureau: Mail your letter and supporting documents to the credit bureau reporting the error. It’s also a good practice to send a similar letter to the original creditor that furnished the information.
- Await the Investigation: According to the FCRA, credit bureaus generally have 30 days to investigate your claim. They will contact the furnisher of the information to verify it.
- Review the Results: The bureau must notify you of the investigation’s outcome in writing. If the dispute is successful, the information will be corrected or removed. You are also entitled to a free updated copy of your credit report.
Frequently Asked Questions (FAQs)
Q: Does disputing an error hurt my credit score?
A: No. Filing a dispute does not negatively impact your credit score. If the dispute leads to the removal of a negative item, your score may improve.
Q: What if the credit bureau decides the information is accurate?
A: If the investigation doesn’t resolve the issue, you have the right to add a 100-word “statement of dispute” to your credit file. This statement will be included in future credit reports sent to lenders. You can also file a complaint with the Consumer Financial Protection Bureau (CFPB).
Q: How much does it cost to dispute an error?
A: It is completely free to dispute information on your credit report. Be cautious of credit repair companies that charge high fees for this service, as you can legally and effectively manage the process on your own.
Q: How long does the dispute process take?
A: Credit bureaus must typically investigate and resolve a dispute within 30 days of receiving it. This period can be extended to 45 days if you provide additional information during the investigation.
