How to Fix an Error on Your Credit Report
It’s one of the most important measures of your financial health-and one in every five individuals has an inaccuracy on it. If you haven’t reviewed your credit report in a while, experts say now is the time.
Many lenders tightened their lending policies in reaction to the COVID-19 outbreak, and those stricter lending rules are still in effect. So having a negative credit record right now might prevent you from taking advantage of debt management opportunities such as refinancing your mortgage or obtaining a personal loan. It might also hurt your chances of getting a mortgage or a high-tier credit card in the future.
“It shouldn’t take a pandemic to drive people into healthy money habits, which include monitoring your credit regularly.” It’s always a good idea to be aware of what’s on your credit report. “Right now, there may be a focus or a sense of urgency to thoroughly investigate it,” says Douglas Boneparth, president and founder of the New York-based financial planning business Bone Fide Wealth. “That is based on the idea that individuals are seeking methods to access liquidity and cash in case the worst happens, such as a loss of income.”
Recognizing this, the three main credit agencies — Equifax, Experian, and TransUnion — have begun to provide free weekly credit reports online, making it simpler than ever to verify and ensure the accuracy of your credit report.
It is worthwhile to devote 15 minutes to this task: According to a Federal Trade Commission survey, one in every five persons will uncover at least one inaccuracy on their credit report. Furthermore, according to recent statistics from the Consumer Financial Protection Bureau, credit reporting is the agency’s most common complaint, with the majority (61%) of complaints citing erroneous information on their credit reports. Within 2018, companies resolved 72% of complaints with an explanation, 18% with non-monetary compensation, and 0.3% with cash reimbursement. Here’s everything you need to know about double-checking your report—and if you discover something is wrong, use our email template to file a complaint.
What Exactly Are Credit Reports and How Do They Work?
Your credit report provides lenders with your financial narrative, allowing them to make educated judgments regarding your creditworthiness.
According to Bruce McClary, vice president of communications for the National Foundation for Credit Counseling, “your credit report is like a report card that marks how effectively you handle your financial commitments.”
These reports are published by three credit bureaus: Experian, TransUnion, and Equifax. These bureaus collect information from your lenders, like as payment history, sum outstanding, and whether or not you’re making on-time payments. You will have a higher credit score if you pay your payments on time and keep your balances low. If you consistently skip payments, your credit score will suffer.
Potential lenders will utilise one or more reports to validate your information. This information will also be used to assess if you are eligible for financing and, if so, what your terms should be. As a result, checking your credit reports is critical for staying on top of the information offered to prospective lenders.
How Frequently Should I Review My Credit Reports?
Checking your report at least once or twice a year is often recommended by professionals as a smart habit. That is how frequently the three credit bureaus normally provide free reports. Checking your own credit is classified as a soft inquiry, which means it will have no negative impact on your credit score.
However, the epidemic has established a new normal, and all three main credit agencies have agreed to enable consumers to check their credit reports weekly until April 2022. Deciding whether to check your credit might be difficult, but it ultimately boils down to your level of confidence in your credit history. Some may want to check it once a year, whilst others may choose to check it frequently following financial hardship or worry during the epidemic.
“In times like this, you should expect things to slip through the gaps,” Boneparth adds.
According to Boneparth, while monitoring your credit report every week may seem excessive, it might be a beneficial tool for anyone who has stopped or postponed payments to ensure lenders are appropriately documenting their credit history.
“Banks are enabling consumers to postpone or reduce payments, and there may be worry that such payments would be reported as overdue rather than current,” Boneparth adds. “For people who are taking their banks up on whatever offers they make, it may make sense to check your credit report more frequently to ensure everything is in order.”
Boneparth suggests that people check all of their credit reports at least once or twice a year under typical conditions. By alternating the agencies, you may also retrieve one report every four months.
This helps you to keep on top of your information and quickly rectify any anomalies identified on your credit reports.
Distinctions Between Credit Reports
When reviewing each report, double-check the correctness of your personal information.
“If they have your salary lower than it should be, it might harm your credit, especially if you have bigger credit card amounts,” says Michael Zahaby, an adjunct finance professor at Florida Gulf Coast University. Along with validating personal information, you should ensure that each of your lenders reflects your payment history and balance information correctly.
Furthermore, there is an area for questions when monitoring your credit. If you apply for a loan, the inquiry will appear on one or more of your reports.
It’s crucial to realise that the information on all three of your credit reports may not be consistent. Some lenders may just report to TransUnion, while others may report to both. As a result, don’t be shocked if one account does not appear on all three reports.
When you apply for a retail credit card, things might get much more complicated. Don’t be worried if the query shows up as the bank providing the card rather than the store (e.g., Synchrony Bank for Amazon). However, if you discover any inaccuracies in one of your credit reports, you must correct them straight soon.
Common Credit Report Errors to Avoid
Checking your credit report on a regular basis to verify accuracy will help you spot issues early. According to the CFPB, the following are some frequent problems to look for while reviewing your credit report:
- Incorrect name, phone number, address, and so forth.
- Accounts that may be associated with someone who has similar personal details
- Accounts that you did not open or that have erroneous information on them as a consequence of identity theft
- Improper balances
- Inadequate credit limitations
- Accounts that you cancelled yet are still shown as open
- Accounts are incorrectly presented as late or overdue because you are labelled as the account owner rather than as an authorised user
- Payment or account opening dates that are incorrect
- Debt records that are repeated
- Previously fixed information reappears improperly
- Accounts with several creditors identified that occur many times
How to Challenge Inaccurate Credit Report Information
When it comes to disputing any errors on your credit report, you may be unsure where to begin. First and foremost, you should notify the credit bureau(s) of your concerns through a traditional letter or email. Credit bureaus will not know to repair any inaccuracies on your credit record unless you provide proper notice.
“It is not unlawful for credit agencies to disclose false information, but it is criminal for them not to fix it when given sufficient notice,” says Rob Harrer of the Chicago Consumer Law Center.
It is critical to notify your credit bureau in writing of any incorrect information. The Federal Trade Commission gives a detailed sample of what to include in a credit bureau dispute letter.
When filing a dispute, add any documents that support your claim. For example, if a creditor claims you didn’t make a payment but you did, you may prove it by providing a bank statement.
[Your Name]
[Your Address]
[Your City, State, Zip Code]
[Date]
Complaint Department
[Company Name]
[Street Address]
[City, State, Zip Code]
It is addressed to:
I hope this [email or letter] finds you in good health. I’m writing to dispute the following information on my credit report from [name of credit reporting firm whose report contains inaccurate information]. Given this, the things I am contesting are marked on a copy of the credit report that I have supplied.
[List numerically the items you wish to contest]
Item 1: Because [explain why] this item [identify the item(s) contested by name of sources, such as creditors or tax court, and indicate kind of item, such as credit account, judgement, etc.] is [inaccurate or incomplete]. I am requesting that the item be removed [or a specified correction be made] in order to remedy the incorrect information.
[Repeat the preceding paragraph if there are further items to dispute]
I’ve included copies of [any included proof, such as bank records or court documents] to back up my claim. Please conduct a reasonable inquiry and, as soon as possible, [remove or correct] the disputed item(s) from my report.
Regards, [Your Name]
[List the items you are enclosing]
Zahaby advises writing down everything, including phone calls with lenders, and writing down the names of any people you talk with concerning the disagreement. With these considerations in mind, consider how each agency resolves disputes:
Experian
You may register a dispute with Experian either online or by mail. When registering a dispute, you should include the following information:
- Name, address, and Social Security number are examples of personal information.
- A duplicate of a government-issued identification card
- A double utility bill (to verify current address)
- The lender’s name, account number, and the cause for the disagreement
Equifax
You may also submit a dispute with Equifax online or by mail. You’ll need to supply your personal information, a copy of a government-issued ID, and the lender, account number, and cause for the dispute in writing, much like Experian.
TransUnion
TransUnion also lets you register a dispute online or via mail. To speed processing, you should present your case in writing with all supporting papers, as well as a copy of your official identification.
What Happens After I File a Complaint?
Once you’ve submitted all of the documents, the credit bureau(s) will contact the lender to verify the information they reported. If they discover a reporting error, they must normally remedy it within 30 days (though that may be extended to 45 days under certain circumstances detailed by the CFPB). The credit agency will then issue you an updated report.
What Is the Importance of Checking My Credit Reports?
Your credit report is an essential indicator of your financial health and the primary barrier to obtaining a credit card or loan. That is why it is critical to be proactive and regularly review your credit reports.
You may remain on top of vital financial information that influences many aspects of your life by doing so. And don’t be concerned about negatively impacting your credit by checking it frequently. Checking your own credit score is a soft inquiry, which means it will not raise any red lights on your credit report.
Catching inaccuracies on your credit report early may save you a lot of trouble when it comes time to make major purchases, such as purchasing a home or a car.
“It’s always preferable to approach everything in your financial life from a proactive rather than a reactive one,” adds Boneparth.
Following standard procedures when submitting disputes increases your chances of having inaccurate information deleted from your credit report. You may not require credit today, but ensuring the accuracy of your credit report will make your life simpler in the future — and as long as you verify your report via the three credit agencies, doing so will not harm your credit. In reality, it can only be beneficial.
Frequently Asked Questions
What is the distinction between my credit score and credit report?
Your credit report contains a comprehensive history of your financial credit activities. Your credit score is a number that is calculated based on the information in your credit report and is intended to provide a picture of your financial position.
How can I obtain a free credit report?
You may obtain your credit report for free from Equifax and TransUnion, but you must order it by mail, and it will most likely take 2 to 3 weeks to arrive.
How can I raise my credit score?
It will take time, but you may increase your credit score by making on-time payments, sticking to a budget, and paying off your obligations.
Will my credit score suffer if I check it frequently?
If you check your own credit score through a credit agency once a year or so, it is considered a soft query and should have no negative impact on your score.
What is the distinction between a ‘soft pull’ and a ‘hard pull’ on my credit report?
A “hard pull” is when a potential lender contacts the two major credit bureaus to get your credit score (which results in a tiny decline in your score), whereas a “soft pull” is an inquiry into your credit history that does not affect your credit score. Credit card companies and other lenders frequently perform soft pulls on your credit record without your knowledge, usually to establish if you’re a dangerous lender or not. These gentle draws on your credit often result in preapproval and credit card offers in the mail.
