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Learn How to Fix Your Credit Report
Remember that credit is money. ~ Benjamin Franklin
Thankfully, the law gives you, the consumer the right to dispute any credit listing on your credit report that you feel may be inaccurate, untimely, misleading, biased, incomplete or unverifiable (questionable items). If a credit bureau can’t verify the accuracy of your disputed listing, then it must be removed from your credit report.
In the American judicial system, you are presumed innocent until proven guilty. However, in our credit system, it may feel as though you are guilty until you prove your innocence.
Why act now?
As mortgage options for consumers with poor credit continue to decrease, having a healthy credit score has never been more important. When you consider that the only alternative is waiting as many as seven years for credit problems to go away, there’s no better time to act than now.
You have an incredible array of rights when it comes to improving your credit, but you must take action on those rights to make them work for you.
Your credit report is a record of your credit activities. It lists all of your credit card accounts and loans, the balances as well as your payment history. It also shows if any action has been taken against you because of unpaid bills such as a collection, lawsuit or bankruptcy filing. Because businesses use this information to evaluate your applications for credit, insurance and employment, it’s important that the information in your report is complete and accurate, especially if you plan to make a big purchase like a home.
The Fair Credit Reporting Act (FCRA), enforced by the Federal Trade Commission (FTC), is designed to promote accuracy and ensure the privacy of the information used in consumer reports. Under the FCRA, both the credit reporting agencies (CRA) and the organization that provided the information to the CRA (your creditor such as a credit card company or even a mortgage lender) must correct any errors or incomplete information in your report.
If you do encounter a mistake on your credit report, several steps need to be taken to correct the matter:
1. The first thing to do is get a copy of your credit report from each of the three major CRAs: Equifax, http://www.equifax.com; Experian, http://www.experian.com; and TransUnion, http://www.tuc.com.
2. In a written letter, tell the CRA what information you believe to be inaccurate. Include copies (not originals) of documents that support your position. Provide your complete name and address, identify each item in your credit report you dispute, and request deletion or correction. Be sure to make copies of your dispute letter and enclosures.
3. Send your letter by certified mail, return receipt requested, so you can document what the CRA received. Often this request can be accomplished online. Be sure to print out a copy of the online submission.
4. The FCRA mandates that all CRAs reinvestigate the items in question — usually within 30 days — unless they consider your dispute frivolous. They also must forward all relevant data you provide about the dispute to the credit card company. After the credit card company receives notice of a dispute from the CRA, it must investigate, review all relevant information and report the results to the CRA.
5. If the disputed information is found to be inaccurate, the credit card company must notify all nationwide CRAs so they can correct this information in your file. Disputed information that cannot be verified must be deleted from your file.
6. When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the CRA cannot put the disputed information back in your file unless the credit card company verifies its accuracy and completeness, and the CRA gives you a written notice that includes the name, address, and phone number of the credit card company.
7. In addition to the CRA, you should also write to the credit card company about the error. Again, include copies of documents that support your dispute. If you are correct — meaning the information you disputed is found inaccurate — the credit card company cannot use it again. Further, at your request, the CRA must send notices of corrections to anyone who received your report in the past six months.
My Free Annual Credit Report
If you’ve been denied credit, insurance, or employment because of information in your credit report from any of the three agencies, you can obtain a free credit report by contacting the agency within 60 days of receiving a denial notice. In addition, you’re entitled to a free copy of your report each year when you certify in writing that:
(1) you’re unemployed and looking for a job within 60 days,
(2) you’re currently on welfare, or
(3) your report contains errors due to fraud.
Otherwise, the agencies charge a fee for a copy of your report.
For additional fees, each agency may offer you different report variations, such as:
- A credit report with or without your credit score.
- A three-in-one credit report that lets you see a side-by-side comparison of records, from all three agencies, with or without scores.
- Notification services when your credit history is requested.
- Routine notification changes to your file.
- Subscriptions that allow you to access your report on a regular basis.
New law promotes free credit reports
Now you can get your free credit report regardless of your employment or financial situation. A recent amendment to the federal Fair Credit Reporting Act (FCRA) mandates that each agency provide you with a free copy of your credit report, at your request, once every year, from www.annualcreditreport.com.
Whether you are thinking of buying a home or simply curious about what’s in your credit report, its important to correct any errors you discover as soon as possible. You don’t want errors in your credit report affecting your eligibility for credit in the future.
A Strategy for Obtaining Your Free Credit Report
Consider this: The FCRA requires that each of the three credit reporting agencies provide you with one free report per year. Instead of receiving all three at one time, consider receiving one report from a single agency every four months. In this manner you will update yourself on a more frequent basis concerning the health of your credit and the accuracy of any reporting.