Your credit score is very important. Think of it as a barometer of your financial health. If it slips, it’ll adversely affect your chances of getting a new credit card — or it could cause you to pay more for insurance or interest on a loan.
So, make sure you keep an eye on your credit score for any major changes. It’s easy to do, too. You’re entitled to one free report a year from each of the three major credit-reporting agencies.
But what do you do if you find something on your credit report that indicates your credit score has taken a hit due to fraud or something else that’s out of your control?
To fix a credit report error, you’ll need to dispute it. That’s the best way to ensure your score stays as high as possible. It may sound scary, but it’s pretty straightforward once you understand the steps.
Sometimes, you won’t know if your credit score has dropped until you check your credit reports. So, it’s really important to stay up to date on what’s happening with your credit reports.
Another good safeguard against a credit report error is setting up a fraud alert with one of the three major credit-reporting agencies: Experian, Equifax and TransUnion. Setting up an alert with one agency will trigger an alert for all three. You can do this by calling, emailing or writing them.
But there are scenarios where you won’t be able to catch the costly error before it affects you. If that happens — and you’re denied a credit card you applied for because of information on your credit report — know that you’re entitled to a free copy of your report, even if you’ve already requested your one free copy of the year.
Remember: Every creditor is not required to report to every credit bureau. That means a credit report error could be on one of your reports and not the others — or a variation of that. If you’re ever denied a service due to poor credit, obtain copies of all three of your credit reports to ensure you’re working with a complete picture. (Requesting your credit report won’t affect your credit score because it is considered a “soft” check.)
Here are a few things to look for when checking your credit report:
- Incorrect account numbers
- Outdated information that negatively affects your score (more than seven years, not including bankruptcy-related issues)
- Payments marked late that were actually paid on time (which causes your account to be marked delinquent)
- Wrong account balances on loans or credit limits
- Someone else named on a credit card or loan
- Accounts that don’t belong to you
Some of these things are signs of identity theft, like an account you don’t remember authorizing or anything linked to an unfamiliar address. When you notice these types of credit report errors, you should dispute them as soon as possible.
Let’s start with the good news: If something is incorrect on your credit report, you’re not the one who has to fix it. The person or company who caused the credit report error is responsible for removing it and correcting the record.
To start that process, you must contact both the credit-reporting agency and the entity providing the information about you to the agencies. But before you do that, collect as much information as possible.
It’s kind of like you’re building your case to defend yourself. And since your credit score is at stake, you should arm yourself with as much supporting information as possible.
Make copies of any documentation (the government stresses not to send the originals) that proves your side of the case. For example: If you paid a bill that’s being shown as delinquent, print it and use it to protect yourself.
You should also start preparing a letter — the Federal Trade Commission has a sample — that includes your identifying information and an explanation of all of the documents you’ll need to prove your case. Include a copy of your credit report with all of the incorrect information highlighted.
If you find yourself in a situation where the information isn’t wrong — for example, you didn’t realize you missed a payment that you would’ve otherwise paid), contact the entity you owe and pay them. Then, request they remove the negative information from your report. You’d be surprised how often this works.
But if the errors are the result of fraud, make sure you send a copy of the information you gathered for your case to the FTC or file a police report. It will only help if a government entity verifies the accuracy of your complaint.
There are several ways to dispute a credit report error. You can call, write a letter or submit online. If you want to do it online, each of three credit-reporting agencies have an online portal (Experian, Equifax and TransUnion) to address these types of problems. That’s the most efficient option.
Be prepared to provide additional information when disputing an error:
- Full name
- Social security number
- Government ID
- Date of birth
- Addresses of the last two years
- Copy of an official bill (utility or insurance statement)
The credit-reporting agencies will respond to your claim within 30 days, unless they deem it “frivolous.” They’ll only do that if it’s actually frivolous. (An example of a frivolous claim is disputing correct information or something that doesn’t actually affect your score.)
And when you’re disputing a claim, you should never have to pay fees of any kind.
Bottom line: Take advantage of your free credit reports in order to protect yourself. If you find an error, stay calm and build your case. Present your information to the credit bureaus and the entity reporting the erroneous information. As long as you stick to the process and prove you’ve taken smart steps with your credit, everything will work out.