Checking your credit reports on an annual basis can be a great idea. A study done by the Federal Trade Commission found that 25% of all consumers have an error on their credit report that negatively impacts their credit score. There's a good chance that your reports have one or more errors.
The study also showed that 80% of those that challenge items on their credit report could get at least some of the negative information altered or removed. And that's great news! You can remove credit report errors with these steps.
1Get Copies Of Your Credit Report
You can get this from the three major bureaus. You can get a free copy of each report each year from Annual Credit Report. If you've recently been rejected for credit, you're also entitled to a free copy of the report containing the critical information.
2Find And Record All The Errors
It would be a shame to do all this work, and you don't know how much of an effect your efforts had on the metric that matters the most. Find and record errors that are harming your credit score. Some people decide to simply challenge all the negative information, whether it's accurate or not.
3Write A Dispute
Your dispute should be straightforward. Provide enough information that the credit bureau can identify you and the item that you're disputing. In general, it's most effective to declare that you were never late or that the account isn't yours.
4Mail Your Disputes
The credit bureau is on the clock from the time they receive your complaint. If they can't complete their investigation within 30 days, they have to make the changes you requested. Include only one dispute per letter.
5Watch The Calendar
The credit bureaus would love for you to file your dispute online. It saves them money. It also helps automate the process.
Receiving your letter is much more cumbersome for them, so send your complaints via snail mail. Keep track of the dates. Their response should be postmarked within 30 days of receiving your letters.
6Evaluate The Responses You Receive
It's likely that some of your disputes will be found in your favor. It's also likely that some will not. One credit bureau has been known to give you what you want without investigating at all.
7Continue Disputing The Negative Items
The credit bureaus exist to make money. They make money by selling credit reports, not by dealing with consumers. Your disputes cost them money. With a little diligence, you're likely to get your way, so be persistent.
8File A Claim In Small Claims Court
Consumers have historically done well, suing the credit bureaus. It's difficult for them to verify the information in your credit reports. Are you satisfied with the results?
If you are not, consider filing a claim in small claims court. Credit bureaus get fined $1,000 per infraction. You'll likely settle out of court and get your credit report cleaned up.
9Always Stay Organized
Maintain records of all your correspondence. Make copies and keep those copies filed in an organized manner. Be sure to keep track of dates.
Fixing the errors on your credit reports is simple, but it does take time. It's important to check your reports every year. The cost of credit reporting errors can be staggering, as they can dramatically increase your interest rates on any loans you receive.
Request your credit reports today. Spend time to examine them carefully. Consider making it a part of your annual financial housekeeping.