Tuesday, June 5, 2012

How to Dispute Discrepancies on Your Credit Report

Your credit report is one of the most important documents in determining your financial standing. A good credit report can help you achieve your financial goals, purchase valuable assets, and qualify for competitive interest rates on new lines of credit. A bad credit report can keep you from purchasing a new home or car, as well as preventing you from qualifying for credit at low interest rates. This makes it essential to know what’s in your credit report and what you can do to improve your credit by reviewing your credit file regularly.

According to a study released on Bankrate.com, a startling 70 percent of all credit reports contain serious errors or discrepancies which can affect an individual’s credit rating. These include having accounts listed twice, incorrect account statuses, discrepancies on the date penalties were incurred, and even the assignment of incorrect aliases that aren’t the same person. Each of these mistakes can cause decreases in your credit rating and affect your ability to borrow at competitive rates.

By Federal law, every U.S. resident is allowed a free copy of their credit report each year. You can get your free reports by going to annualcreditreport.com and following the instructions to get each of your reports. Keep in mind, your free credit report actually includes the three different variations since you get a different report from each of the three main credit bureaus. Each of the three bureaus—Experian, Equifax, and TransUnion—has their own credit reporting system so they maintain their own version of your credit file. If you want to improve your credit, it’s important to check all three reports.

Credit Report

Once you receive copies of each of your reports, the next step is to carefully review the information included therein. Here are some tips of what you want to look for if you’re trying to find discrepancies:

Check your contact information, paying special attention to any aliases the report indicates are you. In most cases these will be variations of your name, but in some instances the credit bureau will incorrectly assign an alias that’s not actually you.
Check the status of each credit account. Make sure current accounts are showing current on your credit report. For delinquent accounts or any penalties incurred from delinquency or litigation make sure the date the penalty was incurred is correct.
Check to make sure your accounts are only listed once, since double listed accounts increase your total debt load. Total debt owed is a major determining factor in FICO credit scores, so a mortgage listed twice can cause serious damage to your credit.

If you find any errors or discrepancies, submit your request for correction in writing to each of the three credit bureaus. It’s important to send the correction to all three agencies, since they’re not required to communicate with each other. Always submit disputes in writing and keep copies of all correspondence. Keep your explanations brief and to-the-point, and you’ll also want to provide copies of any proof or documentation you have. 

Once you submit your corrections, the credit bureaus will communicate the disputes to all of your relevant creditors. They will have an opportunity to confirm or deny your dispute. If the dispute is confirmed as an error, your report gets corrected and you must be notified if the correction gets rejected or changed at a later time. If you are denied a correction, you are allowed by law to present a summary of your side on the dispute in writing to be included in your credit file.

Even after you correct any errors in your credit reports with the three credit bureaus, you may not have the credit scores you had hoped to see. The credit history listed in your credit report is a main determining factor in your credit scores, but it is not the only piece of your credit puzzle. Total debt owed is another major determining factor. In this light, if correcting discrepancies doesn’t deliver the result you want, your best bet is to find ways to improve your credit history and pay off your debt as quickly as possible. If you need help, contact a non-profit credit counseling agency to allow a certified credit counselor to assess your debts and provide recommendations to help you improve your situation.  

Connie Solidad has been writing about finances and debt consolidation for years. She's an expert in the industry and writes about debt incurred from credit cards, debt management options and credit counseling. When Connie is not working, she loves playing with her two dogs in Tampa, Florida. To learn more about debt management refer to ConsolidatedCredit.org.

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