How to Spot and Fix Credit Report Errors

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With banks and other lenders still skittish about lending, it is increasingly important to ensure that you have the best credit score possible.

One surefire way to raise your credit score to credit-worthy status is to remove any errors that don’t belong on your report.

Report Errors: They're Real and the Damage can be Spectacular
Errors on your credit report can drag down your credit score, causing you to miss out on lower interest rates, credit limit increases, even job opportunities. To make sure the credit agencies are reporting accurate and up-to-date information, take time to check your report for errors.

First you need to acquire a copy of your credit report.  But before you shell out for one, the Fair Credit Reporting Act requires each consumer reporting company, Equifax (Stock Quote: EFX), Experian and TransUnion, to provide a free copy of your credit report once every 12 months. Also, federal law entitles you to a free report any time a company takes some kind of negative action against you, such as denying you credit or employment.

You can order your free annual credit report online at Annualcreditreport.com. Even though this site and other sites like it will urge you to sign up for other products or services, you’re not required to purchase anything in order to receive your free credit report. So stay away from subscriptions just to get a credit report.

Here are a few items to look for when going over your credit report for inaccuracies:

  • Make sure your name, personal information and past and present addresses are correct.
  • Job information should be accurate. Spotty information indicates unreliability, so keeping it free of errors will improve how prospective lenders and employers view you.
  • Remove any negative credit accounts that are out-of-date. A credit reporting agency can report most accurate negative information for seven years and bankruptcy information for 10 years. Agencies will remove inactive accounts that are older than the time allowed by statute. Also, information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer, and criminal convictions have no time limit.
  • Add positive credit accounts to your report. Sometimes you credit report fails to reflect all your credit accounts. Look to see if all your good accounts show. Local retailers, gas and travel card companies and credit unions usually don’t report.  If they show positive credit activity, reporting them can boost your score.
  • Mergers can result in multiple entries for the same account, so be sure that bank and store accounts that moved from one source to another are listed only once.
  • Look for any overdraft protection lines of credit. These types of credit lines can linger even after the account has closed.
  • Add any information that shows stability. Long stretches of positive credit activity, and long-term job placement or residency tell lenders that you are a good bet.


How to Go About Removing Errors

The most important thing to remember when removing errors on your credit report is this axiom: If the credit reporting agency cannot verify the information it is reporting, it must remove it. By law, the burden of reporting accurate credit information rests on the credit reporting agencies and the information provider (the person or company providing the information to the credit reporting agency).

Once you spot an error, contact the credit reporting agency and the information provider and tell them about the inaccurate or incomplete information. The easiest way to dispute errors is to go online and visit the Web site of the credit reporting agency. All three agencies provide a step-by-step, online process for disputing errors.

You can also send them a letter stating your issue.  Because credit reporting agencies are not required to investigate disputes they believe to be frivolous, make sure you include copies of any documents that support your position. Your letter should clearly identify the disputed errors, describe the facts regarding them, explain why you dispute the information, and request that the errors be deleted or corrected.  It may help to enclose a copy of your report with the items in question circled.  Remember to keep copies of your dispute letter and any responses from the credit reporting agency.

Once the credit reporting agency starts its investigation, it must forward all the relevant data you provide about the inaccuracy to the company that provided the information. After receiving notice of the dispute, the information provider must investigate. If the information provider confirms the error, it must notify all three credit reporting agencies so they can correct the information. After the investigation is complete, the credit reporting agency must give you the results and a free copy of your report if the dispute results in a change.

If, after disputing an error, the credit reporting agency rules that the information is accurate, you can still mitigate any negative credit items by including a statement in your file explaining your side of the story. You are entitled to include a 100-word statement on your file.  So if all else fails, take time and help lenders understand why a negative item is on your report.

Lastly, make sure you obtain another credit report six months later to verify that the errors are still off your report. It pays, in credit, to be diligent!

—For a comprehensive credit report, visit the BankingMyWay.com Credit Center.

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