There are many obvious reasons to discuss your credit score, and very few that you should ignore. After all, you will need a good credit score and a solid credit history if you ever plan to buy a home or take out an auto loan. A bad credit score can also bite you if you want to rent an apartment or apply for certain jobs.
But your score is not 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 accounts you’ve opened, balances due and payments you’ve made.
Your report and your score are intricately linked. If bad information gets on your credit report due to fraud or misreporting, it can easily hurt your credit score. Similarly, a clear credit report that contains nothing but truthful (and positive) information can help your credit score reach greater heights.
That’s why, each 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 complete through 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 of the details to make sure they’re correct. Incorrect information that may appear on your report may include:
Thanks to the Fair Credit Reporting Act (FCRA), both the credit bureaus and whoever is providing them with the information are responsible for correcting incorrect information on your credit report. This means that, if a specific retailer or bank is reporting an account that doesn’t belong to you or has an incorrect balance, both the credit bureau and the retailer or bank have to work together to make things right.
If you get an error, you should take these steps immediately:
Notify the credit bureaus with a misreporting error
The first step you should take is to inform the credit reporting agency about their error, keeping in mind that it is not possible that all credit bureaus have the same information. You should tell them about the mistake in writing, taking special care to list important details about the mistake along with appropriate documentation. The Federal Trade Commission (FTC) also provides a sample letter that you can use if you need assistance.
Note that credit bureaus usually have 30 days to investigate your claim and need to contact you with a response. They also need to forward the information you sent them to the provider who shared the information with them in the first place.
Notify whoever reported the mistake
You will want to provide the misrepresenting company with copies of any documents that prove an error occurred. Make sure to include all the details needed to prove your claim along with copies of documents that support yours. The FTC provides another sample dispute letter that you can use for this example.
Check your credit report for updates
Generally, credit reporting agencies are required to notify you in writing of the outcome of your case. They are legally required to give you another free copy of your credit report if your dispute causes a permanent change.
You also have the option of asking the credit bureaus to send notices of any corrections to anyone who requested your credit report within the past six months. You can also send an updated copy to anyone who requests a revised version of your credit report for employment-related reasons.
taking care of your credit
While the steps above may seem tedious, it is important to understand the damage that incorrect information can do to your credit report. For example, if late payments are incorrect on your report, you could see your credit score drop through no fault of your own. And if there are accounts on your credit report that aren’t even yours, it could indicate a much bigger problem, like outright identity theft.
Fortunately, the small amount of time required to dispute an item on your credit report can really pay off in a big way. Eventually, any negative information you manage to clean up should stop dragging your score down immediately.
However, you should also note that you can only remove false negative information from your credit report. Any harmful information that is true must remain on your report until sufficient time has elapsed. Generally speaking, negative information and reporting can stay on your credit report for up to seven years and bankruptcy can stay on your report for up to 10 years.
Bottom-line
Errors happen all the time, and they may never be uncovered if you don’t look for them yourself. In addition to staying on top of your credit report, it can help to sign up for a free service that gives you updates about 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’re both worth checking out.