Credit scores are one of the most important numbers in consumers’ lives. They can mean the difference between renting a home or owning one, and getting a great interest rate on your car loan or walking off the lot with a subprime contract.And yet, the credit reporting industry is even more flawed than we thought.
A 2013 report by the Federal Trade Commission estimates one out of every five people has an inaccurate credit report. On a national scale, that translates to as many as 42 million mistakes.
Whether it’s a misspelled last name or a line of credit you never remember opening, no mistake is too small to have corrected.
Spotting them is the easy part. Getting them fixed is a whole other story. Here’s how to dispute credit errors on your report:
Step one: Once a year, download your free credit report from all three credit bureaus. These are Experian, TransUnion, and Equifax. The simplest way to access all three is to visit annualcreditreport.com. It’s crucial to check all three. If you spot an error on one report, it’s likely that it shows up on another.
Step two: File a dispute with each credit reporting agency that has the error on file. It’s a pain to file more than one dispute, but it’s crucial if you want to keep all your reports clean. Each credit reporting agency has a form consumers can fill out in order to dispute errors. Using the web form is the quickest way to get your complaint in the system, and far more efficient than calling their 800 number and talking to representatives in India.
Step three: Let the system work. Disputes take at least a few weeks to process. During that time, each case is assigned a two- or three-word code and sent off to the credit lender that supplied the incorrect data. They’ll process the dispute and let the credit agency know whether your complaint is valid or not.
Step four: You’ll get the results in an e-mail or by regular mail. If the lender admits to a mistake, they’ll immediately correct the data and your report will be updated by the credit reporting agency.
Step five: If your dispute was denied, this is when things can get tricky. You can file another dispute, but you’ll strengthen your case if you find proof. Gather as much evidence to support your claim as possible, like receipts or any other proof of payment. Mail it in to the credit reporting agency via snail mail (as far as we can tell, credit reporting agency websites don’t allow attachments).
Once an agency has recieved the new evidence, they are legally obligated to reopen your case. If that doesn’t work, you can skip the middle man altogether and go directly to your lender. In either case, they have 30 to 45 days to resolve your claim under the Fair Credit Reporting Act.
All of this may sound like quite a process, but checking once a year is well worth the effort.