Checking your credit reports annually can help you catch errors that negatively impact your credit score. In fact, a study by the Federal Trade Commission found that 25% of consumers have an error on their credit report. That’s a quarter of all people! And those errors can be costly, as they can lead to higher interest rates on loans and credit cards.
But the good news is that you can dispute these errors and get them corrected. The same study found that 80% of consumers who challenge items on their credit report are able to get some negative information altered or removed.
So, how can you get started on fixing errors on your credit report? First, you’ll need to get copies of your credit report from the three major bureaus. You can get a free copy of each report each year from AnnualCreditReport.com. And if you’ve recently been rejected for credit, you’re entitled to a free copy of the report containing the derogatory information.
Once you have your reports, you’ll want to get your official credit scores as well. This will help you understand how much of an effect your efforts to correct errors will have on the metric that matters most.
Next, carefully examine your credit reports and record any errors that are harming your credit score. Some people choose to challenge all negative information, whether it’s accurate or not. But it’s most effective to focus on errors that are truly impacting your credit score.
When you’re ready to dispute an error, write a letter to the credit bureau that includes enough information for them to identify you and the item you’re disputing. Be clear and concise, and stick to the facts. It’s most effective to declare that you were never late or that the account isn’t yours. Make sure to include any documentation that supports your claim.
When you mail your dispute, be sure to request a return receipt. The credit bureau has 30 days to investigate and respond to your dispute. If they can’t complete their investigation within 30 days, they have to make the changes you requested. And it’s important to include only one dispute per letter to keep things organized.
While the credit bureaus would prefer you file your dispute online, it’s actually more effective to send your complaints via snail-mail. Watch the calendar and evaluate the responses you receive back. It’s likely that some of your disputes will be found in your favor, while others may not. If you’re not satisfied with the results, consider filing a claim in small claims court.
Remember to stay organized throughout the process. Keep records of all your correspondence and make copies for your files. And be persistent. With a little diligence, you’re likely to get your way.
Fixing errors on your credit report can be time-consuming, but it’s worth it. Checking your reports annually and disputing any errors can save you money in the long run. Consider making it a part of your annual financial housekeeping.