When did you last thoroughly check your credit report? If it’s been a while, now is a great time to look into it. Your credit score is important and one major way to help repair it is by disputing or fixing errors. Credit bureaus can make mistakes, so don’t let those errors cost you from getting the loan you need for your property investments.
For this National Credit Education Month, here is all you need to know about how to dispute and fix credit errors, including 5 easy steps.
How Credit Report Errors Can Affect You
Errors on your credit report can negatively impact your credit score and make it harder for you to qualify for loans. In a study by the Federal Trade Commission (FTC), 26% of participants identified at least one error that could make them seem riskier to lenders. This means you may be charged higher interest rates on loans or need to put in larger down payments.
Credit reporting companies also sell your credit report information to groups that want to evaluate your creditworthiness, such as utility companies, insurers, and employers. So, if a utility company reviews a less-than-favorable credit report, they could offer you less favorable terms as a customer. This process is known as risk-based pricing.
Common Credit Report Errors
Mistakes happen, but don’t let them impact your credit score. Here are examples of some common credit report errors to look out for:
- Account information from another person who has the same or similar name to you
- Incorrect details, such as name, address, or phone number
- Accounts linked to you through identity theft
- Debts or accounts listed more than once
- A closed account that is reported as still open
- Listing of being an account owner on accounts you were just an authorized user
- Collection accounts you’ve paid off that still show as unpaid
- Outdated information, such as an account incorrectly labeled as late or delinquent
- Inaccurate account balances or credit limits
How to Dispute and Fix Credit Errors in 5 Steps
1. Review Your Credit Report
At least once a year, you should review your credit reports to identify incomplete or inaccurate information. Look out for the common mistakes listed above to make sure everything is being reported accurately. The three major credit bureaus – Experian, Equifax, and TransUnion – provide one free credit report a year through annualcreditreport.com. During the current pandemic, you can get free weekly online credit reports!
Note: If the issue you identify is an identity-related mistake made by the credit bureau, you’ll want to skip to step 3.
2. Contact the Furnisher
Furnishers are companies that provide information to the credit bureau, including credit card issuers, utility companies, and banks. If the error on your report was inaccurate information provided by the furnisher, contact them directly to fix it and provide a more accurate report.
The furnisher’s address should be listed on your credit report. Or you can contact the company for the correct address. Sometimes, the issue will be resolved at this point, and no further action is needed.
3. Send a Dispute to the Credit Bureau
If your issue wasn’t resolved in step 2 or the error is made by the credit bureau, you need to contact the credit bureau directly. This sample dispute letter provided by the U.S. Federal Trade Commission (FTC) offers a great guideline about what information to include. You’ll also want to:
- Include copies of materials supporting why the information is inaccurate
- Add a copy of your credit report with the errors highlighted or circled
- Send your letter by certified mail with “return receipt requested”
- Keep your post office receipt and copies of everything you send
You can also submit disputes online at the following links for the three major credit bureaus:
4. Wait for The Investigation
The credit bureau has around 30 days after they receive your dispute to investigate the claims and verify the information with the furnisher. They are required to report their results to you within 5 days of completing the investigation.
If your dispute was determined to be “frivolous,” they still have to report to you that they won’t investigate. You can try to resubmit your dispute with updated materials. Double-check that all the information you submitted is complete and accurate.
5. Review Investigation Results
Following an investigation, you will receive the results in writing and a free copy of your credit report if any changes were made. You can also ask the credit bureau to notify any group that has seen the incorrect information of the corrections made.
Sometimes the investigation results aren’t what you want. If a valid error remains on your credit report or you believe you were treated unfairly during the process, file a complaint with the Consumer Financial Protection Bureau (CFPB). They will forward the complaint to the company you have an issue with and provide you with a response within 15 days.
Your credit score is important for loan pre-approvals when you want to invest in property. At the Zion Group, we can help you get prepared to purchase, including working to secure the best rate and loan structure for your needs. Schedule a free consultation call with us today.
– The Zion Team
Phone: (858) 324-1951 | To schedule a meeting or call, click here.