Your credit history is important to a lot of people, from banks and utilities, to auto and mortgage lenders, prospective employers, and more. The accuracy of information that appears on your credit report can make the difference between getting approved for a loan or not.
Most consumers work hard at managing their credit. They pay bills on time, keep credit balances low and monitor credit reports regularly. But all of a sudden, and sometimes for an unexplainable reason, an error appears on the credit report. Maybe it shows an open account that you know was closed. Maybe it indicates that you made a late payment when you didn't. Maybe it's a listing for an account that you never had.
You start to panic and wonder about the impact the error may have -- Will I be able to obtain new credit? Will I be perceived as a credit risk? Will my credit application be denied? Will I pay more for a loan? Will I be denied a promotion or a new job?
These problems are real. But don't worry. You can take charge of your credit profile and correct errors by following these steps listed below.
Step 1: Plan Ahead. Before seeking new credit, check your credit reports.
Before going out to test drive that new car, meet with a realtor to look at new homes, or consider a loan for home renovation, get your credit reports from Transunion, Experian and Equifax. Errors on your reports could cause you to be denied for that loan, and ultimately, drop your credit score making it more difficult to get approved for any new credit.
When seeking new credit, check all three reports to see if there are any errors. Information listed on one credit report may vary from the other two bureaus. If you find an error, correct it before applying for new credit.
A prospective lender may choose to review your report from one, two or all three of the bureaus. You need to be aware of the information listed on each report and certain that it is an accurate reflection of your credit history BEFORE the application is made.
Step 2: How to get your credit reports
Consumers are entitled to obtain one free credit report from Transunion, Experian and Equifax within a twelve month period. By writing directly to each bureau, you may request your report. Reviewing current reports helps to ensure that the listed information is up-to-date and accurate.
As well, credit reports may be obtained for free under these circumstances:
- Credit denial within the past 60 days
- Victim of identity theft
- On public assistance
- Unemployed and seeking new employment within the next 60 days
The letter you send to the credit bureau must include your full name, date of birth, current and prior addresses, as well as employers. Be sure to enclose two forms of identification, such as a current driver's license, utility bill or pay stub. These documents validate your identity to the credit bureau and confirm who you are and where you live.
Step 3: Review your reports for accuracy
Transunion, Experian and Equifax all report the same type of information. However, that information may vary from one report to another. If you discover an error on one report, look to see if the same error appears on the other two reports. It will become clear to you whether a dispute should be sent to one, two, or all three bureaus.
Mistakes on credit reports can be big or small.
Judgments, bankruptcies, repossessions or delinquent account carry negative weight on a credit report. If this type of listing appears incorrectly - whether the account belongs to you or not - it could be the cause of a loan denial or a drop in credit score.
Other errors may not be as significant, such as the misspelling of a name or unfamiliar address. However, this type of "bad" information could match your good name with someone else when a lender reviews an application for new credit. Always make sure that the information on your report is accurate. If there's an error, dispute it with the credit bureau and get it corrected.
Step 4: Effective Disputes to the Credit Bureau
Today, most people live busy lives and look for the most efficient ways to handle problems. Toll free customer service lines, online disputes or emails, may seem to be the quickest way of addressing the problems, however they may not be the most effective.
If you have errors on your credit report, review these Tips for an Effective Credit Bureau Dispute. You need to get errors corrected or removed. Remember to:
- Send a written dispute to the credit bureau.
- Keep your dispute letter short and to the point.
- State your problem clearly.
- Provide documents that support your dispute.
- State clearly the action you would like the bureau to take.
- Request a written reply to your dispute.
If the credit bureau does not correct errors on your report, your consumer rights may have been violated under the Fair Credit Reporting Act. The attorneys at Flitter Milz, P.C. are experienced in representing consumers that have become victims of inaccurate credit reporting. Contact Us for a free legal evaluation of your credit reports and steps you have taken to get errors corrected.