How to Dispute and Fix Errors on Credit Scores

Almost every guide to improving credit scores implores consumers to pull a copy of their credit reports and search for errors. A 2014 article from Consumers Union claims that more than ten million consumers had errors in their credit reports that could lead to higher interest rates on loans. Citing recent Federal Trade Commission (FTC) findings, Consumers Union said some 40 million consumers (some 20 percent) have at least one error on their credit report. Now at the beginning of a new year, it's a prudent move for consumers to inspect their credit reports from all major reporting agencies.

You Say, They Said

In 2011, the FTC reports, more than eight million Americans contacted three major credit reporting agencies – TransUnion, Experian, Equifax – about errors in their credit reports. Unfortunately, in most disputes of findings, the credit reporting agencies tended to side with creditors that originally reported the information unless they agreed that they made a mistake. Even if a report is disputed and the creditor agrees, it can take time to change the records. It takes diligence to have errors corrected, said the FTC, but it's worth it to consumers.

Items that can be incorrectly reported include bankruptcies, judgments, credit accounts, liens, credit inquiries collections, and personal identification data. The last of these is critically important given the increase of identity theft as a malicious practice.

Reporting Errors on Your Credit Report

The ability for consumers to dispute errors was created by the federal Fair Credit Reporting Act (FCRA). Even if disputes are not found in their favor, consumers are allowed to add notes to their report explaining their case. Obviously, the first step in resolving disputes is to pull copies of all three credit scores. If there are inconsistencies between them, or information that conflicts with personal financial records, consumers should file a dispute with every reporting agency that cites the error.

Reporting agencies have online dispute forms:

The FTC provides a sample letter to include with your dispute, including the correct format for reporting the source (creditors), credit type and inaccuracy. Make copies; never include original letters or documents in reporting disputes. Any dispute documents sent by conventional mail should be sent as a certified letter creating a paper trail of contacts to any reporting agency.

Sorry: The Burden's On You

It's up to the consumer to lead the way in the dispute process. That includes writing the provider of the incorrect information on the credit report with details about the dispute. Typically, the credit agency and the provider (creditor) of disputed information have 30 days to look into the dispute and respond to the consumer, or the derogatory item must be removed. Documents sent to reporting agencies should request that the information be corrected or deleted from your reports.

If the credit reporting agency finds in your favor, it must provide a free credit report showing the corrections and a notice in writing of the changes.

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