3 steps to dispute a credit report error
By Matt Alderton
December 8, 2014
Comedian Dan Nainan tells jokes for a living. His credit, however, is no laughing matter.
He had worked hard to improve his credit, after a few youthful transgressions. But Nainan was shocked when he was recently denied a credit limit increase on one of his credit cards. It turns out two of his father's accounts showed up on one of his credit reports.
Nainan isn't alone.
One in five consumers has an error on at least one of his credit reports, according to a 2013 report from the Federal Trade Commission. Five percent have an error that's significant enough that they likely are paying inflated rates on credit cards, auto loans and insurance.
For Nainan, it was a happy ending — after a letter to the credit bureau and several weeks, the credit file was corrected, and his credit score shot up 80 points.
“Errors are very commonplace,” says attorney Jason M. Kaplan, owner of The Credit Pros, a Newark, N.J.-based credit repair company. “It's not that the credit bureaus and creditors are trying to do wrong; it's just that they deal with a lot of data, and that data is organized in such a way that mistakes are common.”
Fortunately, mistakes can be corrected — and must be corrected, under the terms of the Fair Credit Reporting Act, which states that consumers have the right to dispute errors on their credit reports for free, and that credit bureaus must correct or delete them, typically within 30 days.
Although there are rare cases to the contrary, most disputes are resolved quickly and easily, says Rod Griffin, director of public education at credit bureau Experian. To make sure yours is one of them, follow these three steps:
1. Review your credit report
Step one is requesting a copy of your credit report from each of the three credit bureaus: Experian, Equifax and TransUnion. You can access your reports for free once a year at AnnualCreditReport.com.
“It's always good to have a paper trail and evidence of what you've submitted.”
Jason M. Kaplan, The Credit Pros
Griffin recommends requesting your report directly from the bureaus, rather than a third-party reseller. Doing so, he says, guarantees the report's authenticity, integrity and timeliness, and ensures that you and the credit bureau are looking at exactly the same information.
Upon receiving your credit report, review it for inaccurate or incomplete information. Pay special attention to:
- Identifying information: Your credit report lists all variations of your name (e.g., Bob versus Robert), address (e.g., Main Street versus Main Avenue) and Social Security number, as reported by creditors to the credit bureau. “If there's something you don't recognize, we can work with you to identify where the information came from and get it corrected,” Griffin says.
- Account information: “Make sure you recognize all the accounts on your credit report, and that all the information about them is being reported correctly — especially the payment history,” Griffin says. “Also confirm the status of the account: whether it's current, paid or settled.”
- Public records: If your credit report includes tax liens, civil judgments and bankruptcies, confirm they're supposed to be there, and that they're being reported correctly, Griffin advises. Negative information, if accurate, cannot be disputed or removed.
- Inquiries: Your credit report lists parties that have requested your credit report. Pay special attention to “hard” inquiries, made by lenders at the request of a consumer who is applying for credit. Hard inquiries you didn't make — for a car loan, for example, or a credit card — could indicate fraud, according to Griffin.
2. Send a dispute letter.
Mistakes can indicate something as serious as identity theft or as innocuous as a clerical error. The dispute process, however, is the same: You should notify each applicable credit bureau of the error by mail, at which point the bureaus will initiate an investigation with the creditor who supplied the disputed information. While there is an online option to file a dispute, experts recommend you use snail mail, return receipt requested, instead, for the best results. That way, you can include copies of any supplemental information, such as receipts, canceled checks, etc., along with your dispute.
“Make sure you recognize all the accounts on your credit report, and that all the information about them is being reported correctly — especially the payment history.”
Rod Griffin, Experian
Griffin promises that the bureaus treat all methods of dispute equally. Kaplan, however, recommends disputing by certified mail — just in case.
“It's always good to have a paper trail and evidence of what you've submitted,” he says. “Also, credit reporting law is governed by the Fair Credit Reporting Act, which was written well before the Internet. Because the law references ‘writings' and responses to those writings, you technically have a lot more protection under the law if you correspond in writing.”
In fact, consumers who file online may forfeit certain rights. For instance, online dispute forms sometimes include arbitration clauses; when you “accept” them via mouse-click, you give up your right to subsequently file a lawsuit.
3. Don't give up.
By law, bureaus must determine within 30 days that disputed information should be corrected, deleted or sustained. If it's the latter, you can continue your dispute by corresponding directly with the creditor, according to Kaplan. Without the credit bureaus acting as middlemen, he says, you can ensure your story is heard and your evidence seen.
And if you're still not satisfied with the outcome? “If you disagree with the results of a dispute, you can add what's called a 'Statement of Dispute' on your credit report, which lets you tell your side of the story,” Griffin says.
As a last resort, you also can hire legal counsel. “It's always OK to dispute errors yourself,” Kaplan concludes, “but if you're not getting the responses you want, it might be time to hire an attorney.”