We all make mistakes. Fortunately for us, our mistakes don’t prevent other people from qualifying for a home loan or getting a job. But those kind of mistakes could show up on your credit report, which is why everyone should be vigilant about fixing them.
Your credit score is derived from your credit report. Information, such as late payments, debt balances and credit usage, on your credit report factor into your credit score. The higher your score, the likelier lenders will lend to you and that you will receive a low interest rate.
Recently, the three major credit bureaus – Equifax, TransUnion and Experian – announced that they're going to continue allowing consumers to receive free weekly credit reports for one more year until April 20, 2022.
So, there isn’t a better time than now to check your credit report for errors. Especially because COVID-19 relief programs to address financial hardships caused by a layoff or loss of income created room for reporting glitches.
For example, many people in need have been allowed to delay payments on credit cards, auto loans, mortgages, student loans and other loans. But some of those deferred payments have been wrongly showing up on credit reports as missed payments.
Complaints about credit reporting errors were through the roof in 2020, according to the Consumer Financial Protection Bureau. It received 282,000 complaints about credit reporting issues last year, which is more than twice as many as in 2019. Credit reporting complaints made up 63% of all complaints submitted.
The three biggest reported problems: incorrect information on credit reports, problems with a credit bureau’s investigation into a problem on a credit report, and debt collection companies attempting to collect debt not owed.
Here are tips for fixing mistakes on your credit report.
Get your credit report for free
Federal law allows you to request one free copy of your credit report every 12 months from each national credit bureau. As a result of the pandemic, however, bureaus began offering free weekly reports. Those have been extended until April 20, 2022.
You must use annualcreditreport.com to access those free weekly reports.
Dispute the error with the credit reporting company
If you find any error, you can start by disputing that information with the credit reporting company (Experian, Equifax, and/or Transunion). The Consumer Financial Protection Bureau recommends making your dispute in writing. You should explain what you think is wrong and why. Be sure to include copies of documents that support your dispute.
If you faced financial troubles due to the pandemic, you should ask lenders to send a letter or email to confirm of the exact terms of any adjustments or changes in payment terms on your loans. Often, those changes were made on a temporary, or even individual, basis. You need documentation for what accommodations were granted to you. For example, did you receive a payment waiver, loan extension, deferment or forbearance.
This brings us to the next tip.
Dispute the error with the company that provided the information to the credit bureau
You need to also dispute the error in writing with the company that first reported the inaccurate information, often called the furnishing company. Examples of furnishers are your bank, your apartment landlord or your credit card company.
Don’t forget to follow up
Credit reporting companies have 30 days to resolve a dispute, but most are completed within two weeks. They must provide you with written results of their investigation once it’s completed. If the dispute extends beyond that time frame, the law requires that the disputed information must be removed from the credit report.
In the case a credit reporting company determines your claim is unwarranted, it can choose not to investigate the dispute so long as it sends you a notice within five days saying that it has made such a determination.
If the furnisher agrees it made an error and corrects your information, it must notify all credit reporting companies so they can update their reports with the correct information. But if the furnisher believes the information is accurate and does not update or remove it, you can request the credit reporting company to include a statement explaining the dispute in your credit file. This statement will be included in future reports and provided to whoever requests your credit report.
It’s important to note that if you think the error is the result of identity theft, you may need to take additional steps to try to resolve the issue, such as placing a fraud alert or security freeze on your credit report. You can visit the Federal Trade Commission Identity Theft website www.consumer.gov/idtheft or call (877) IDTHEFT for more information on the various identity theft protections that might be available to you.
Ultimately, the best way to prevent credit reporting mistakes from impacting you is to keep your outstanding balances low, pay your bills on time, review your credit report at least yearly and dispute any error immediately.