By Holly Johnson on 12 September 2019
There
are several obvious reasons to give a hoot about your credit score, and very
few reasons you should ignore it. After all, you'll need a good credit score
and a solid credit history if you ever plan to purchase a home or take out an
auto loan. A bad credit score can even come back to bite you if you want to
rent an apartment or apply for certain jobs.
But
your score isn't the only detail you need to pay attention to. You also need to
keep an eye on your
credit report — the document that lists your formal credit history
including any accounts you have open, balances due, and payments you've
made.
Your
report and your score are intricately intertwined. If bad information gets on
your credit report due to fraud or misreporting, this can easily cause your
credit score to nosedive. Likewise, a clear credit report with nothing but true
(and positive) information can help your credit score reach greater heights.
That's
why, every single year, you should get a free copy of your credit report from
all three credit reporting agencies — Experian, Equifax, and TransUnion.
Fortunately, this part is easy to accomplish via AnnualCreditReport.com.
How to dispute
information on your credit report
Once
you have a copy of your credit report from all three bureaus, you'll want to
look over all the details to make sure they're correct. Incorrect information
you might notice on your report may include:
·
Errors regarding your name or personal information
·
Accounts that aren't even yours
·
Accounts belonging to someone with a name that is similar to
yours
·
Closed accounts that are reported as open
·
Incorrectly reported late payments
·
Accounts listed more than once
·
Incorrect balances on accounts
·
Incorrect credit limits on accounts
Thanks
to the Fair Credit Reporting Act (FCRA), both the credit bureau and whoever is
providing them with information are responsible for correcting misinformation
on your credit report. This means that, if a specific retailer or bank is
reporting an account that isn't yours or an incorrect balance, both the credit
bureau and the retailer or bank have to work together to make things right.
If you
find an error, here are the steps you should take right away:
Inform the credit bureau
with the incorrect information of the mistake
The
first step you should take is informing the credit reporting agency of their
error, keeping in mind that it's possible not all the credit bureaus will have
the same information. You should let them know about the mistake in writing,
taking special care to list important details about the mistake with proper
documentation. The Federal Trade Commission (FTC) even offers a
sample letter you can use if you need help.
Note
that credit bureaus usually have 30 days to investigate your claim and they are
required to get back to you with a response. They are also required to forward
the information you sent them to the provider who shared the information with
them in the first place.
Inform whoever provided
the information of the mistake
You'll
also want to provide the company reporting the incorrect information with
copies of any documentation that prove an error has occurred. Make sure to include
all details required to prove your claim along with copies of documentation
that backs you up. The FTC offers another sample
dispute letter you can use for this instance.
Watch for your credit
report to be updated
Generally
speaking, credit reporting agencies are required to inform you in writing of
the results of your case. They are also legally required to give you another
free copy of your credit report if your dispute caused a permanent
change.
You
also have the option to ask the credit bureau to send notices of any
corrections to anyone who has requested your credit report within the last six
months. You can even have an updated copy sent to anyone who has asked for a
modified version of your credit report for reasons regarding employment.
Caring about your credit
While
the steps above may sound tedious, it's crucial to understand the damage
incorrect information on your credit report can do. If you have inaccurate late
payments on your report, for example, you could see
your credit score plummet through no fault of your own. And if there
are accounts on your credit report that aren't even yours, that could signify a
much larger problem, such as outright identity theft.
Fortunately,
the small amount of time required to dispute an item on your credit report
really can pay off in a big way. After all, any negative information you manage
to get wiped clean should immediately stop dragging your score down.
However,
you should also note that you'll only be able to get false negative information
removed from your credit reports. Any damaging information that's true will
have to linger on your report until enough time has passed. Generally speaking,
negative information and reporting can remain on your credit report for up to
seven years and bankruptcy can stay on your report for 10 years.
The bottom line
Errors
happen all the time, and they may never be uncovered if you don't find them
yourself. In addition to staying on top of your credit reports, it can help to
sign up for a free service that gives you updates on new accounts in your name
or fluctuations in your credit score. CreditKarma.com and CreditSesame.com are
two that offer a similar free service with these features, so they are both
worth checking out.
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