If you are in a financial crisis, considering bankruptcy, or rebuilding after bankruptcy, keeping an eye on your credit report is essential. The fact is that no system is foolproof, and mistakes can be made. Your credit report may contain errors that hamper your ability to move forward effectively, so it is essential to know what to do when credit report errors occur.
What Are Credit Reports?
Anyone who has ever borrowed money or made a credit card purchase has a credit report on record. This report relates the history of an individual’s relationship with debt – identifying open accounts, current debt balances, and how reliably monthly payments are made.
The information detailed in these reports is submitted by creditors and lenders and compiled by credit reporting companies known as credit bureaus. The bureaus analyze data about past spending habits and generate algorithms to predict financial behavior in the future. The three major consumer credit bureaus in the United States are Equifax, Experian, and TransUnion.
A credit bureau is a debt reporting company. It is regulated by the Fair Credit Reporting Act (FCRA), legislation that guarantees accuracy, fairness, and privacy when handling and sharing consumer financial information. The FCRA also allows access to credit report data, permitting at least one free credit report from all three major bureaus.
How to Fix Credit Report Errors
Examples of errors that may appear on a credit report include:
- On-time payments reported as late
- Closed accounts still showing as open
- Incorrect account balances
- Duplicate listing of the same account
Each credit bureau has its own methods and policies, often producing varied results. In other words, even if the report from one bureau has no errors, the other reports should still be checked. If you find a mistake on a credit report regarding one of your accounts, follow these steps:
File a Dispute With the Credit Bureau: A dispute is a formal challenge to an entry on your credit report. A dispute should be submitted in writing, explain the nature of the error, and provide any documentation to prove the entry should be updated.
Contact The Furnisher: Credit experts recommend debtors contact the company that submitted the incorrect information, typically a bank or credit card provider. Send them a dispute letter as well. This is because the party responsible for making a mistake is the one that needs to fix it. If the furnisher is in error, they have 30 days to investigate the dispute. They will submit an update to the credit bureau if the dispute is valid.
In some cases, the furnisher will claim that their adverse report is accurate. If that occurs, the credit bureau will only remove the entry if it can be proven that there is a case of mistaken identity. This is not uncommon, as many people have the same name or live at the same address.
Investigation Review: The bureaus and furnishers have 45 days to respond to a filed dispute. Their responses must also be in writing and thoroughly explain the decision and any further action to be taken. If the furnisher submitted erroneous information, it is their responsibility to notify all three major credit bureaus to amend the error on the report. If the credit bureau made a mistake, they would make the corrections.
Remember, even though it is the agency’s responsibility to update your credit report, you will need to advocate for yourself, watch and make sure the changes are made.
Accurate Credit Report Entries
Under the Fair Credit Reporting Act, adverse information can only stay on your credit report for a set period of time. In most cases, it drops off after seven years. The good news is that positive information about your credit stays on your report indefinitely.
These reports broadcast your financial health to every lending institution you may need. Because of that, it is in your best interest to ensure it accurately reflects your ability to manage debt responsibly.
Bankruptcy is an Option
For those who find themselves in financial difficulty and don’t see a way out, bankruptcy may be a viable option. Don’t let creditors intimidate you or garnish your wages – call for the professional help you need. Richard V. Ellis is a Sarasota bankruptcy attorney who has helped hundreds of area residents to get back on their feet. Call today to learn more.