A credit report is one of the essential factors concerning financial health. For example, many lenders and banks will go through your credit history to determine whether you qualify for a credit card or mortgage. In contrast, credit bureaus and creditors can make some minor mistakes at some point of assessment, leading to credit report errors. When such an occasion occurs, you will need to react faster and correct the errors before it’s too late. Failure to correct the credit report errors may lead to critical conditions such as loss of financial reputation.
To correct the errors in your credit report, you will first have to check with the credit bureaus to identify the mistakes. Then, if there is any mistake, you need to submit a dispute letter to the relevant credit reporting agencies. After composing a dispute letter, you are required to review the results and update the credit score individually. Also, you may contact personnel such as the data furnisher, especially when your credit report error has a close relationship with the lender’s provided information or the Consumer Financial Protection Bureau (CFPB) in case you aren’t content with the investigation results.
Credit report errors
Research done by the Federal Trade Commission shows that almost 25% of customers probably have encountered errors in their credit reports. These credit report errors could have a massive impact on their credit limits. Moreover, one in five individuals has opened complaints related to their credit report errors. Hence, their credit report score is usually updated according to reports. This is an indication that when building the credit score, at some point, you will see the submitted words containing errors. These errors will significantly lower the credit limits that you have. Also, the errors hinder you from a chance to open a new credit account or qualifications for higher loans in case they aren’t corrected.
The CFPB advises the consumer to regularly check their credit reports to clarify any errors. You must go through each credit report, especially by visiting some major credit bureau organization’s platforms such as annualcreditreport.com or Credit Sesame.
There are 3 main significant credit bureaus. These are Experian, Transunion, and Equifax. These main bureaus have a crucial function in separating the reports before updating them on the credit card. Therefore, the following errors are expected by the bureaus since there might be minor distinctions from different accounts:
● Personal information, including name, address, date of birth, phone numbers, social security numbers, may be incorrect. These errors signal identity theft, and they may have a tremendous negative effect on the overall credit score.
● Account information that does not belong to the right owner. This may indicate that you are sharing your credit account with someone having a similar name. Also, somebody might have secretly opened a credit account using your details.
● Account information may be incorrect such as wrong account numbers, account balance, and wrong credit limits. You should regularly check your account details to ensure the closed credit accounts aren’t opened without your consent.
● Negative information in your accounts, such as late payment and expired debts, may reappear in your updated credit report. The negative information should only be in your credit report for about 7 years. It will automatically be dismissed when it expires. In case it doesn’t fall off, open a dispute for fixation.
● Insertion of wrong information, at some point, was disputed and then dismissed from your credit account in the past. When such happens, you have to open a new dispute to fix it completely.
Fixing of credit report errors
Before you think of removing credit report errors from your report, you have to understand that there are many parties involved in assessing and reviewing your credit score. One of these parties is FICO – and analytic software that provides information on your credit score to businesses and customers. The FICO company also offers global credit scores that are used by lenders in determining whether you will be loaned or receive credit cards.
Submitting a dispute letter
After the identification of the errors on the report, you have to fix them. The best way to do this is by sending a dispute letter to the relevant authority. Different credit bureaus produce distinct credit reports according to your creditworthiness before they update the information. These bureaus also allow you to send disputes about inaccuracies indicated on each of the words. This is done through several means such as online means, emailing, or directly calling the bureau.
When you send any dispute letter, ensure that the supporting documents are included for a more detailed investigation. These supporting materials include:
● Your Social Security Number.
● Either a birth certificate or a divorce decree.
● A national identification card or a driving license.
● Bank statements.
● Billing statements.
● Current address and those of the past 2 years.
● A copy of the federal trade commission, especially when you report identity theft.
● Payment or canceled checks to show that a bill has been paid.
In case you need sample dispute letters, you can visit the CFPB website. Ensure that you always include an email copy to verify the incorrect information on your credit account. You should also save several copies of submitted letters as recommended by the CFPB.
Checking with data furnishers
Data furnisher is a financial organization that provides your credit information to credit bureaus for compilation. The organization can be a bank, lender, or credit card user. When attempting to fix errors in your credit report, you should contact the data furnisher to correct the mistakes on their side. The data furnisher contact information is usually found on the credit report. You may also contact them for the correct addresses.
According to credit bureau advisor Kevin Haney, you may go to a data furnisher directly if your errors are related to credit card status or payment of debt.
Wait for up to 45 days for investigation
Most of the bureau organizations will take about 30 to 45 days during the investigation of your dispute. After which, they will give the response. However, this period is not fixed as it may also take up to 90 days in case you submit a new complaint within the investigation period of the previous report.
After the investigation is done, the credit bureau takes about 5 days to give you feedback about your account status and validation of your dispute. But, when the argument is found to be “frivolous,” the investigation may stop, and the credit reporting agency may not update your credit report. This happens when you submit incomplete or incorrect supporting documentation or when you claim the whole information is wrong without enough proof.
Reviewing the investigation results
If the dispute leads to changes in the credit report, the bureau should provide the investigation results in writing. It will also include the name and address of the data furnisher or creditor that had provided incorrect information. If you are satisfied with the results, you can ask your credit reporting agency to inform all other lenders who received inaccurate reports for the past six months.
Suppose you are not satisfied with the results. In that case, you can write another dispute letter or contact the CFPB for clarification. This aids in cleaning the credit history and maximizes your credit limits.
The bottom line
You are advised to regularly check your credit report. This ensures that you are maintaining a clarified credit history. You might get approved for high credit limits as long as your account is clear. Suppose you encounter any mistakes in your credit report. In that case, you should act quickly and file a dispute with the bureau for corrections to be made. This is done by following the above simple steps.