How to Fight an Error on Your Credit Report and Fix Your Credit
When it comes to taking charge of your personal finances, having a thorough understanding of your credit score can be critical to coming out ahead. While many personal finance pundits eschew the use of credit cards, if used responsibly, a credit card can be a major asset.
One reason that your credit score is so useful is that it helps you qualify for more competitive interest rates, which, in turn, can help you save hundreds or thousands of dollars over the course of your life.
Unless you’re a super-saver, you’ll likely need to take out a loan at some point for a major life expense such as a new house, graduate school, or a car. If you have a better credit score, you’ll qualify for better rates—and these savings can be sizeable.
For example, on a conventional 30-year fixed-rate mortgage, the difference between a 2.8% interest rate and a 3% interest rate may seem small; however, by saving about $25 on your monthly mortgage payment over the course of thirty years you’ll wind up saving $9,000 in total!
Clearly, creditworthiness has myriad benefits—but what should you do to fix your credit or deal with an error on your credit report? Thanks to the Consumer Financial Protection Bureau, the Fair Credit Reporting Act, and the internet, accessing your credit report and disputing any issues with the credit bureaus is a relatively straightforward process. Read on to learn how to obtain your credit report, fight credit report errors, and ultimately fix your credit.
Obtain your credit report
The first thing you’ll want to do in order to monitor your credit history is to get a copy of your credit report. There are actually three major credit bureaus that lenders report your account information to: Experian, Equifax, and Transunion. Each of these credit bureaus approaches your credit file a bit differently; however, the account information should all be roughly the same.
The simplest way to get all three credit reports is by heading to the website of a data furnisher like www.annualcreditreport.com, which traditionally provides you with one free copy of your credit report per year per credit bureau. Traditionally because during the pandemic such a rise in credit fraud has occurred there are now unlimited reports available for the time being. While the website looks a little dated, rest assured that it’s secure to use and supported by the Federal Trade Commission. From there, you’ll only be three steps away from being able to review your credit scores online.
Fill out Annual Credit Report’s form
The first step to get your credit reports is to fill out the form on www.annualcreditreport.com. You’ll need to put in some basic information such as your legal name as it appears on your social security card or tax returns, as well as your birth date, social security number, and current address.
Choose which reports you want to see
The next step is to select the credit reports you’re interested in looking at. While in some scenarios you may only want to check information from one bureau, if it’s your first time looking at your credit report, it’s a good idea to select all three.
Review each report
After you’ve selected your reports, you’ll need to confirm your identity in order to access each report. You’ll likely be asked some questions about outstanding debts or credit cards you currently have. Some of these questions are specifically tricky in order to ensure that you don’t become a victim of identity theft.
Once you’ve made it past the screening questions, you can download your report and really dig into each one to ensure that nothing is amiss.
Look for discrepancies
While most credit reports are automated, there could still be some issues or mistakes on your credit report. While inaccurate information isn’t always negative information, if you’re planning on making a big purchase or improving your credit, you’ll want to make sure your report is as accurate as possible. Some of the most common issues with your credit report are:
A consumer credit report is a great way to make sure that all of your accounts and tradelines are contributing to your credit score. That being said, sometimes there’s incomplete information that could lead to delinquencies on your account.
For example, if you set up auto-pay for your credit card but notice that you have a missed payment, you’ll want to contact your credit card issuer with a return receipt from that payment in order to correct the problem.
Payment history is a critical component of your credit score, so if you notice that a payment you’ve made isn’t reflected on your report, you’ll definitely want to dispute it.
Wrong name or address
If you have a similar name to someone else, especially a family member you’ve lived with, it’s not uncommon for your accounts to get mixed. Your credit report should be a reflection of your personal finances, however, so it’s important to fix these errors when you notice them.
Sometimes a credit bureau does not have accurate information, whether information reported by your credit account is inaccurate or the bureau doesn't have up-to-date information. For example, items on your credit report fall off your report every 7 years (except for bankruptcy, which is 10 years). If you had a negative account that brings down your credit score that still appears on your report after 7 years, it can still have a negative impact and should be removed.
While most errors on your credit report are relatively harmless, sometimes you’ll see a swath of unfamiliar activity on your account. If you have credit cards are loans opened in your name that you don’t recognize, it could mean that you’ve been the victim of identity theft.
In these sorts of situations, you’ll want to act quickly.
Contact your bank, creditors, and other lenders and let them know about the situation so that you can freeze your accounts and start canceling the fraudulent accounts if possible. You will also want to file an identity theft affidavit with the Federal Trade Commission and may want to file a police report, too.
Signing up for credit monitoring services and changing all of your online passwords is another valuable step to take in preventing further damage from identity theft.
How to initiate a dispute
If you notice an error on your credit report, you’ll want to send a dispute letter to the credit reporting agency highlighting the incorrect information. Credit bureaus also have an online dispute form you can use to flag disputed information.
You’ll want to make sure that you dispute the information with all three bureaus (Equifax, TransUnion, and Experian) in order to get it removed from each report.
During the dispute process, the credit bureau will investigate the disputed item on your account and will get back to you if more information is needed. Generally speaking, disputes can take anywhere from two to four weeks to be handled.
Annualcreditreport.com is completely free of charge, which is why it’s such a great option for credit monitoring.
It’s also worth noting that because of the COVID-19 pandemic, annnualcreditreport.com is letting you access your credit report for free each week through April 2021. Outside of the pandemic, you can usually only access your reports for free on an annual basis (hence the name Annual Credit Report).
One thing to note when using annualcreditreport.com is that many individual bureaus will ask you to pay for your credit score since your credit report doesn’t contain this information. If you don’t want to pay but are interested in what your FICO score is, many banks and other services offer this sort of information free-of-charge. For example, you can look up your credit score from a platform like Credit Karma or through Discover’s Free Credit Scorecard.
Pros and cons of fixing your credit report
Fixing your credit report can be such a powerful personal finance move that it’s hard to say there are any drawbacks to doing it. Even so, here are the biggest pros and cons of fighting an error on your credit report.
Simple to do
Reviewing your credit report can be done in under ten minutes, making it one of the easiest things you do each year to increase your financial security.
Can improve your credit score
If you have errors on your credit report, it could be negatively impacting your credit score. By addressing these problems with the credit bureaus themselves, you can start to repair your credit and raise your score.
If you do find an error, it’s impossible to immediately fix the problem as a result of the dispute process. Even so, fixing the problem in under a month is better than not fixing it all, so it’s still worth the time and effort it takes to file a dispute.
The bottom line
When it comes to obtaining your credit report and disputing incorrect or fraudulent information, it’s actually a lot more straightforward than you’d think. The most common errors on a credit report generally relate to your personal information or address; however, credit reports may also tip you off to identity theft. As such, it’s a good idea to take a look at your credit report each year—particularly if you’re planning on making a large purchase in the future that will require a credit check.