The first step in improving your credit score is understanding that your credit score is a direct reflection of your credit report and the credit history it contains. Your credit history will not only affect whether or not you can qualify for a loan, but also the interest rates that are offered with that credit approval. A good credit score can help you qualify for a loan and for good interest rates.
But credit report errors can lower your credit score. For this reason, consumers must make it a point to routinely check their credit report and verify the information contained there is accurate. If inaccurate information is being reported, it is up to the consumer to take the necessary steps to rectify the problem. Here we look at what you can do if information on your credit report is inaccurate.
How To Make Corrections On Your Credit Report
Spot the error. In order to fix an error, you must first be able to spot an error. To do this you must have access to your credit report. Each year, you have the opportunity to request a free credit report from each of the major credit bureaus. This means you have at minimum three times per year when you can request your credit report, free of charge, making it possible to remain abreast of the information contained there. Visit annualcreditreport.com, the only official website offering free annual credit reports to request your copy. Once you receive your credit report, carefully go over the information contained there, looking for any discrepancies or inaccurate information.
The error could be anything from a late payment, which wasn’t late to a debt you’ve already paid still listed on the report. Regardless of the error, you can play a major role in your overall credit score. It’s vital you have the error fixed as soon as possible, and it’s easier than you may think.
Dispute error with credit reporting agency. If you spot an error on your credit report, your next step is to contact the credit reporting agency to dispute the error. Do this in writing with a simple dispute letter. Be very specific in detailing the error and provide any documentation (copies, not original documents) that support your claim. Send this dispute letter to the credit reporting agency and be sure to use a tracking or delivery confirmation as proof they received your dispute letter. The credit reporting agency then has 30 days to investigate your claim and respond in writing with the results of the investigation.
Dispute error with creditor. Following the same steps mentioned above, contact the creditor or company supplying the inaccurate information disputing the credit report error. Again, do so in writing and provide copies of documentation which proves the information is incorrect. Creditors are required to notify the credit reporting agency that information they are reporting has been disputed by the consumer.
A lot of people will skip reporting the error to the credit agency and will only report the error to the lender. These people assume skipping the credit bureau will same them both time and work. This could be a serious mistake. If you decide to only report the error to the lender, there is a chance you’ll miss the opportunity to get it corrected through the credit agency if the lender decides not to take any action.
Follow up. If the credit reporting agency does not remove erroneous information, you can request that a statement of dispute be added to your credit file. This give you the opportunity to provide your side of the story to anyone who views your credit report in the future.
Check your credit report and score for changes. Removing an error from your credit report can be done fairly quickly (sometimes within 30 days), but it may take awhile to trickle down to your credit score. Be sure to wait at least a month or two before checking. Here are a few resources for a free credit score.
Keep everything. Depending on the error and how complex it is, the whole process can take a long time. One important thing to remember is keep all of the documentation. Make sure you don’t lose anything and keep an extra copy of everything. The best practice is to keep a folder which is dedicated to the error report. It makes it easier to keep everything together. If the error ever has to go to court (hopefully it won’t), it’s going to prevent you from having to scramble to find any files or documents.
Remember it is your responsibility to make sure the information on your credit report is accurate and if errors are made, you must take the initiative to correct these errors. The credit reporting agency compiles the information it receives from reporting companies and presents this information on your credit report. They do not verify this information beforehand, however they are required to investigate claims of incorrect information and follow the necessary steps to determine if an error has been made.
Regularly checking your credit score is one of the best habits you can get into. Your credit score is going to impact a lot of different areas of your life. Even a simple error on your credit report can play a huge role in the rates you get for a loan or even your chances of being approved for a loan.
Not only can getting regular credit reports help ensure there are no errors on your credit score, but it can also protect your identity. There are millions of people who fall victim to identity theft. There are plenty of tools you can buy which will constantly monitor your credit score, but most of those tools can’t catch small errors. Nothing beats your eyes scanning the report. You get a free report every year, you might as well take advantage of it.