Dealing With Mistakes On Your Credit Report

Dealing With Mistakes On Your Credit Report

With how prevalent credit mistakes are, everyone should know how to combat them. We detail how consumers can find errors and what steps need to be taken afterwards to wipe them from your record.

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According to studies by the Federal Trade Commission (FTC) approximately one in twenty credit reports contain errors. That's concerning, given the fact that credit reports can affect things such as employment, landing an apartment, getting approved for a credit card, and even insurance prices. Given how important they are, consumers should take measures to make sure their credit report represents them accurately.

How Can You Check For Errors?

You can't deal with mistakes on your credit report unless you know they're there. You should get into the habit of checking your report at least once per year. Read through it and lookout for any accounts you don't remember signing up for, or debts you don't recognize. These are usually caused by either fraud or an error on the part of one of the agencies responsible for collecting data on you. Either way, it's something you'll want to fix, before someone runs a credit check on you.

You can request a free copy of your credit reports once per year through the government run You will receive reports from each of the three major credit bureaus –- Experian, Equifax, and TransUnion. Most lenders rely on FICO scores generated from data collected by these three agencies; therefore checking them for errors is sufficient.

If you very concerned about errors or identity theft, you can also sign up for a credit monitoring service. Most of these are subscription based, ranging from $15 to $30 per month. In recent years, however, there has been an influx of new companies that offer similar services for free. The free credit monitoring companies tend to be more superficial, allowing you to check your credit score, and a limited list of items on your report. Most of these companies, will also not report new activity to you. They rely on you logging into your account, and looking for suspicious behavior on your own. The paid services, on the other hand, actively monitor your credit reports for you. Additionally, in some cases, paid credit monitoring services also provide you with identity theft insurance.

Choosing between a paid or free credit monitoring service should come down to how much protection you feel you need. If you are okay with checking a website on your own, the free options will do just fine. If you want to relax and know that some third-party will take care of things, you should expect to pay around $20 for the convenience.

How Can You Correct Errors?

If you wish to dispute an error on your credit report, there are three agencies you may contact. The Fair Credit Reporting Act mandates that the reporting and data collection agencies investigate any disputes, in a reasonable amount of time. In order to maximize your chances of getting a speedy response, make sure you send over the adequate information. Your first step should be contacting the credit-reporting agency. It’s best you send a certified letter detailing the nature of the complaint -- that way you can receive confirmation the complaint was received. Your letter should include:

  • Your name, address, and social security number
  • Any relevant documents
  • A copy of your credit report
  • A clear and detailed explanation of the issue at hand
  • Evidence supporting your claim, if possible

Only send copies of the above items. It’s crucial you keep the originals, in case a filing error results in the letter being lost. You can send the letters to the following agencies:

TransUnion LLC Consumer Dispute Center P.O. Box 2000 Chester, PA 19016Equifax Information Services LLC P.O. Box 740256 Atlanta, GA 30374Experian P.O. Box 4500 Allen, TX 75013

You can send a similar letter to the information provider that supplied the credit reporting bureaus with the false information.

You can frequently come across individuals for whom the complaint process took over a year to resolve. If you do not hear from the companies you reached out to, the final agency you can contact is the Consumer Financial Protection Bureau (CFPB). By filing an online complaint, the agency can follow-up with the credit bureaus on your behalf.

If the investigation reveals there was in fact an error on your report, it will be deleted from your file. Better yet, the credit reporting bureaus are also required to contact anyone who pulled your credit report within the last six months, notifying them of the error.

Joe Resendiz

Joe Resendiz is a former investment banking analyst for Goldman Sachs, where he covered public sector and infrastructure financing. During his time on Wall Street, Joe worked closely with the debt capital markets team, which allowed him to gain unique insights into the credit market. Joe is currently a research analyst who covers credit cards and the payments industry. He earned a bachelor’s degree from the University of Texas at Austin, where he majored in finance.

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