How to fix an error on your credit report: A guide
It might be time to check your credit report. A study by the Federal Trade Commission earlier this year found that one in five consumers had errors on their credit reports that could result in less favorable terms for loans.
“A lot of people have checked it at some point, but it’s not part of the regular regime,” says Liz Weston, a personal finance expert. “It’s like flossing. You know you should do it, but you kind of can’t get around to it.”
Your credit report is based on the bill payments you have missed or paid late, loans that you have paid off, plus your current amount of debt. It contains information about where you work and live, how you pay your bills, and data on whether you’ve been sued, arrested, or filed for bankruptcy. Agencies, like the major credit bureaus, gather this information and sell it to creditors, employers, insurers, and others.
Where should you go if you want to check your report?
The one and only place to get your free annual credit reports: AnnualCreditReport.com.
“A lot of people get misled by look-alike sites or they put that address into a search engine rather than right into the URL bar and what happens is they get sidetracked to a site that’s not the real deal. So you want to go type it in: AnnualCreditReport.com. That’s where you will find your three credit reports from the three different credit bureaus,” says Weston.
Why are there three credit bureaus?
Weston says consumers should remember that the credit bureaus are not federal agencies. They are private businesses and there are many credit reporting agencies — but the three bureaus are the largest.
The three major national credit bureaus are:
Equifax, 1-800-685-1111
Fraud Hotline: 1-888-766-0008
Experian, 1-888-397-3742
Fraud Hotline: 1-888-397-3742
TransUnion, 1-800-916-8800
Fraud Hotline: 1-800-680-7289
Is your credit report the same as your credit score?
No. Your credit report is different from your credit score. Your credit report is a record of your debt history. It contains information about your credit history and the status of your credit accounts. Your credit score is a numerical value calculated from information that’s found in your credit file. It’s used to predict your creditworthiness — how likely you are to do things like repay a loan or make payments on time.
Weston says you don’t necessarily have a federal right to look at your credit score. Unlike your credit report, which you can get at no cost to you annually for free at AnnualCreditReport.com, you usually have to pay for your credit score. If you want to see your credit score you should go to the website: MyFico.com, the only site that has the FICO scores that lenders use.
What should you do if you find a mistake?
“First try to do an assessment of how serious this is. I mean, if you look at your credit report and they have your old employer listed or they have an old address listed rather than you present one. I mean, you can go ahead and get that corrected. Is it worth the effort? I don’t particularly think so. What you want to look for are serious errors, like accounts that aren’t yours or a collection that isn’t yours or an account reporting that you paid late when you didn’t. All those things can seriously hurt your credit score,” says Weston.
You should also look at things that can indicate identity theft, such as an address you’ve never lived at. As far as inquiries on your report, Weston says that while you should check them out, they’re less of a concern than information that isn’t correct and shouldn’t be on there.
How can you correct errors?
“When you’re online you will see a button where you can dispute these things. If you don’t see it, then click on the actual item itself. Delve in a little bit deeper and it should pop up. All the bureaus have a way for you to dispute it online. We used to say, do this all in writing and that’s certainly something you can do, but it might be quicker to start on the website itself,” says Weston.
Weston says consumers should be aware that this process might not work. If it doesn’t work, you might have to write everything down and send it via certified mail just to get a paper trail going.
How to dispute a credit report error
The Federal Trade Commission released a report saying that 42 million consumers have at least one “potentially material error” in their credit reports.
Who else can help?
These days there are allies for consumers who need help. If you’re having trouble fixing an error — even after you’ve followed the law, appealed to the creditor, and done everything you can — you can send a complaint to the Consumer Financial Protection Bureau. What might work best, Weston say, is hiring a lawyer who understands consumer credit law. You can find one at the National Association of Consumer Advocates.
“You don’t necessarily want to go to a credit repair firm that’s advertising itself on the Internet,” says Weston. “On the same token, most people don’t need to hire help to fix these things. A lot of the errors are fairly minor, you can take care of them yourself.”
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