Various studies have found that up to 80 percent of credit reports contain errors. An error on your report can lead to serious consequences–such as higher interest rates when you borrow money–and can affect your ability to qualify for credit, employment, insurance, and rental housing. Luckily, there are steps you can take to avoid and fix errors on your credit report.
Be a good borrower
The best way to maintain a good credit score and to avoid mistakes on your report is to make payments on time and to not use too much of your available credit.
Check your reports annually
Get free credit reports each year from all three major credit bureaus—Equifax, Experian, and TransUnion—by visiting annualcreditreport.com or calling 877-322-8228. Be aware that credit scores can differ among the three bureaus.
Review the reports carefully
Even though each bureau’s report will summarize any negatives, read through the entire report for mistakes. Common errors include an account that has been closed being reported as active, accounts that are mistakenly in your name, and outdated or incorrect personal information or credit limit information.
Contest errors with the bureau
You can challenge mistakes right on annualcreditreport.com, but it’s better to contact the bureau directly via regular mail, a phone call, or on their websites (Equifax, Experian, and TransUnion). If you mail a letter, include your complete name and address, Social Security number, account numbers, a full explanation of the error, and a request for deletion or correction of the information. Enclose copies (not originals) of documents that support your position and a photocopy of your credit report with the items in question circled. Send the letter and enclosures by certified mail, and request a return receipt so you can document what the credit bureau received. The bureau is legally required to investigate within 30 days.
Notify the source of the error
You also should contact the creditor that’s attached to the mistake. Send the creditor photocopies of everything you sent to the credit bureau with a similar letter. Once you’ve taken this step, the creditor should include a notice of your dispute each time it reports the information to a credit bureau.
Keep good records
Keep copies of all of your correspondence, and take notes about each telephone conversation you have.
Know how errors should be handled
If the information you’re disputing is indeed found to be incorrect, the creditor must notify the major credit bureaus so they can fix it. Disputed information that can’t be verified should be deleted from your report.
It can take months to clear up errors on credit reports. Once a mistake has finally been fixed, order your free credit report again as soon as you can and make sure it has not reappeared.
Be on the lookout for identity theft
Strange details in your credit report, such as an unfamiliar P.O. Box address in your name, are signs that your identity may have been stolen. If you think you’ve been a victim of identity theft, file fraud alerts with all three credit bureaus: Equifax (800-525-6285), Experian (888-397-3742), and TransUnion (800-680-7289). Also file a complaint with the Federal Trade Commission online or by calling 877-438-4338, and close all accounts that were opened fraudulently.
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