Credit Repair 101: Identifying and Correcting Credit Report Mistakes involves reviewing your credit report to identify errors that may be negatively impacting your credit score. To correct these mistakes, obtain a copy of your credit report, highlight errors, contact credit bureaus in writing, provide documentation, and wait for investigation and correction within 30 days.
Checking your credit report isn’t the most enthralling activity, but it is one of the most essential. It is paramount that your credit report contains correct information that accurately reflects your credit history.
Mistakes can cost you in many ways: higher interest rates, denial of a loan, or a larger vehicle payment, just to name a few. We will show you how to check your credit report, request a free copy, and repair any errors you may come across.
Mistakes in your credit report may impact your credit score negatively. Request a free copy of your credit report annually from the three main credit bureaus, Equifax, Experian, and Transunion. Check for any mistakes, and dispute errors in writing, never online. Retain copies of all documents.
Don’t be intimidated by credit reports. Get in the habit of checking your credit score often. Contrary to popular belief, checking your score will not lower it. You can request a free copy of your credit report to ensure it doesn’t contain errors that could harm you. Being informed will enable you to keep your finances in your control.
What Types of Mistakes are Common on Credit Reports?
Twenty-five percent of American credit reports contain erroneous information that can hurt your credit score. Whether renting an apartment, buying a car, or looking for that dream home, you will want a good credit history and a satisfactory credit score.
A few mistakes could equal thousands of dollars in future interest rates, denial of a personal loan, or the inability to secure a mortgage. Employers often require a good credit score for their prospective employees.
There is a difference between a credit score and a credit report. Your credit report is a thorough account of your credit history, while your credit score is a three-digit number indicating your creditworthiness. Credit scores range from 300-850, while the average American has a score of around 700. You can and should check your credit score often.
In 1970 Congress passed the Fair Credit Reporting Act (FCRA) to promote accuracy, privacy, and fairness in credit reporting agencies’ operations. Everything they report must be correct and verifiable.
Ensure that you are listed as the owner of the account and not just an authorized user. Another thing to watch for is that your account balance and payment history agree with your records. Check that your debts are reported correctly as open or closed and that the amounts are accurate. Account numbers must be posted as shown on your statement.
Be sure that all of your pertinent information is right. The spelling of your name: first, last, middle name, or initial, must be correct. Telephone numbers should be current. Your address should be listed completely, including the zip code. Your birth date and social security number must be accurate. Remember that all information has to be verifiable.
An account that isn’t yours could be identity theft, or it may be that your account has been merged mistakenly with someone with a similar name, address, or social security number. Identity theft should be reported to The Federal Trade Commission online at IdentityTheft.gov. They can help you with warning signs, what to do if you suspect identity theft, and how to create a recovery plan, including sample letters. If your account has merged with another in error, you should dispute the matter with the credit reporting agency.
The Ins & Outs of Disputing Credit Report Errors
For errors on your credit report, file a letter of dispute. You must file a written complaint so that you will have proof. Keep a copy of all correspondence and retain the originals of pertinent documents. Contact the lender directly if possible. If, for some reason, you are unable to contact the lender, then go to the bureau that is reporting the misinformation. By law, they are obliged to rectify or remove any incorrect items.
Inaccuracies can negatively impact your credit score. Your credit report must be correct and current to ensure your credit score is as high as possible.
Filing a dispute will not negatively affect your credit score. Provide as much proof as you can.
✔️ Include copies of pertinent statements, and retain the originals.
✔️ It is possible to dispute a mistake online, but this method rarely results in a resolution.
✔️ A letter of dispute is more effective, and templates are available online.
- Include your name, address, and social security number.
- Basic information, such as the account name and number.
- Details about the mistake: what is wrong and why.
- Proof to back your argument: Invoices, receipts, or a bank statement.
- Enclose one document to prove your identity (a photo identification card) and one to verify your address, such as a utility bill.
- Be patient. Lenders and credit bureaus have 30 days to investigate and five days after that to make a decision.
Your dispute could be labeled frivolous if you didn’t include enough evidence or if it is identical to one you have already filed without new evidence. The remedy is to uncover new evidence supporting your claim and refile.
Fix Credit Report Fast
First, request a free copy of your credit report at annualcreditreport.com. You can get up to three credit reports annually, so rotate between Equifax, Experian, and TransUnion every four months. Check the details for any information that isn’t right. Look for identity theft or any misinformation contained in the report. Remember that any mistake, no matter how small, can lower your credit score. Be sure that all accounts belong to you.
Old debts can become a problem. By law, debts must be removed from your credit report after the statute of limitations runs out, usually seven years. Bankruptcy cases will remain for ten years. Remember that the original date of the debt is the starting point.
Here is how to contact the threes credit reporting agencies:
PO Box 7404256
Atlanta, GA 30374-0256
PO Box 9701
Allen, TX 75013
PO Box 2000
Chester, PA 19022-2000
Send your letter by certified mail with the return receipt requested. A letter of dispute should include as much information as possible. Explain what information is incorrect, and enclose any documents to prove your case. Always send a copy and retain the original.
Disputing Credit Report Errors
A letter is the best way to dispute a credit report error. A telephone call is insufficient. Filing it online does not give you the proof you may need. If, after investigating, the credit reporting agency finds it in your favor, they must confirm it in writing and send you a free copy of your credit report. A dispute will never lower your credit score. Removing bad debt can increase your score by as much as 50 points!
An error on one credit report but not the other two is usually a result of misinformation by a creditor or identity theft. You should always dispute accounts that aren’t yours. You also need to look for items shown as delinquent when they are, in fact, current. Remember that nearly one in five credit reports contains inaccurate information.
Negative information, such as late or missed payments, will remain on your credit history for up to seven years. Your credit score will improve, especially if you have been responsible in other areas of your finances. Taking care of delinquent accounts and paying your bills on time can increase your score in as few as three months.
Credit Restoration Companies- Are They Worth it?
The short answer is no. Credit Restoration companies promise, for a fee, to assist you in rebuilding damaged credit. The truth is that you can perform these tasks yourself. Be cautious when doing business with any company that suggests you lie to improve your credit score. Don’t be fooled by an unscrupulous business. Legally, they can only assist you in removing erroneous information, and it’s not magic.
The best way to raise your credit score is by improving your payment history. Use your credit card, but pay it in full each month. Pay your rent and utilities promptly. You should avoid new loan applications or making a large purchase unless you absolutely must. Don’t use all of your available credit on revolving charge accounts.
Follow these recommendations, and you may increase your credit score by up to two hundred points in as little as six months, although it can take as long as two years to achieve a great credit score.
Of course, not all credit restoration companies are unscrupulous. There are clear warning signs that you can look for.
1 Some companies suggest you apply for a new taxpayer identification number, a terrible idea for several reasons. First, it is illegal. Second, having little or no credit is worse than having bad credit. Beware of any company that advises you to lie.
2 Bogus companies may require a down payment. This questionable practice is unlawful and inadvisable for consumers already in financial straits. Reputable companies will request an installment at the end of thirty days.
3 Credit repair companies will not ask you to dispute legitimate charges. Filing multiple disputes puts accounts on hold while the investigation takes place. Your credit score improves temporarily but doesn’t reflect the correct state of your account.
4 Closing old credit card accounts is not advisable. Keep them open and make your payments on time. Be sure to keep your balances on other cards manageable.
5Don’t stop using credit altogether, either. The only way to repair or restore your credit history is to use your credit wisely. Don’t overextend yourself, and pay your obligations promptly.
What is a Credit Score?
While a credit report is your history of repayment and activity, a credit score predicts how likely you are to repay a loan or financial obligation. This information comes from your credit history, so you can see why having an accurate credit report is essential. We only have three credit reports, but many credit scores that can vary slightly.
Free credit scores available from credit card companies and some lenders are known as “educational credit scores” They are a more general reflection of your credit tendencies. They can help you monitor your credit and keep an eye on your history.
A FICO* Score, on the other hand, is used by 90% of lenders and financial institutions when deciding to approve loans and mortgages. They are much more detailed and utilize information from TransUnion and Equifax credit reports. Experian is the largest of the three bureaus, but all are considered equally accurate. FICO scores are sometimes available online through your bank or financial institution. You can purchase a one-time FICO score for about $20.00 or a monthly subscription for slightly less. Check your FICO score six months before making a large purchase enabling you to know what kind of interest rate you can expect.
*FICO is an acronym for Fair Isaac Corporation. FICO was first named the “Fair, Isaac Company” for its founders, Bill Fair and Earl Isaac. Based in Bozeman, Montana, this company began in 1956 and specialized in producing credit scores. 90% of banks and financial institutions use FICO Scores to determine a consumer’s creditworthiness.
Improve and Maintain Your Credit Score
There are several ways to take care of your credit score. You can add up to 100 points to your credit score in a short time by following these tips.
Make payments promptly. Rent, utilities, auto loans, and credit cards should all be paid early or on time. Late payments can remain on your record for seven years! You can make payments on your credit cards more often than once a month or pay them off completely if you can.
Avoid using all of your available credit. You should strive to use only 30% of your credit limit on any card. The owners of the best credit scores are those whose credit utilization is 7% or less.
✔️ Check your credit report and dispute errors. Look for accounts that aren’t yours, closed accounts reported as open, and payments that show delinquent when they are current.
✔️ Don’t open any new credit cards, but don’t close any of your existing accounts. Lenders look for the length of time you have had an account, so keep them open. Avoid applying for new loans until you get back on track. Every new inquiry lowers your score.
✔️ Consider acquiring a secured credit card. Secured cards require that you deposit a certain amount of money equal to your credit limit. For example, a $500 deposit will give you a $500 credit limit.
✔️ Make your payments on time. Secured cards are great for consumers who have little or no credit history and those who have somewhat battered their credit.
✔️ Be patient. Slow and steady wins the race, and it is certainly true when it comes to our finances.
Frequently Asked Questions about Credit Report Mistakes
Here are some frequently asked questions and answers about credit report mistakes:
What are credit report mistakes?
Credit report mistakes are errors or inaccuracies that appear on a credit report, which can negatively affect your credit score and financial well-being.
What are some common credit report mistakes?
Common credit report mistakes include incorrect personal information, incorrect account information, fraudulent accounts or transactions, incorrect payment statuses, and multiple credit inquiries without permission.
How do I check my credit report for mistakes?
You can obtain a free credit report every year from the three main credit bureaus: Experian, TransUnion, and Equifax. Once you have obtained your report, you should review it carefully for any errors and inaccuracies.
How do I correct credit report mistakes?
If you find errors or inaccuracies on your credit report, you can dispute them by submitting a dispute letter to the credit bureau(s) or creditor(s) reporting the error. The bureau will investigate your dispute and notify you of its findings.
How long does it take to correct credit report mistakes?
The credit bureau has up to 30 to 45 days to investigate and correct an error on your credit report.
How can credit report mistakes impact my credit score?
Credit report mistakes can significantly impact your credit score, potentially pushing it down and preventing you from obtaining credit when you need it.
Can I prevent future credit report mistakes?
Yes, you can prevent future credit report mistakes by carefully reviewing your credit report regularly for errors and inaccuracies. You can also protect your personal information and sign up for credit-monitoring services to monitor any changes in your credit report.
How does correcting credit report mistakes affect my credit score?
Correcting credit report mistakes can improve your credit score by removing any negative information or inaccuracies from your credit report.
What should I do if I continue to have credit report mistakes even after disputing them?
If you experience persisting issues with your credit report after disputing any mistakes, you should contact the credit bureau directly or seek advice from a professional credit counseling agency.
Correcting credit report mistakes can be a daunting task, but it is crucial to ensuring your financial health and stability. By identifying and disputing credit report mistakes, you can prevent future issues and maintain a good credit score.