How to dispute and fix credit report errors

If your credit report contains an error, it’s on you to get it fixed — the sooner, the better. A serious mistake on your credit report could cost you the next time you buy a car or cellphone, make a mortgage application, or look to land a job or apartment.

Errors are more common than you might expect. Starting in 2012, the Federal Trade Commission launched a series of studies on the accuracy of credit reports.

The study found that one in five consumers had at least one error on their credit reports, and one in 20 had errors significant enough to cause them to be denied lower interest rates — yet many consumers don’t even know there’s a problem until they apply for a new line of credit and get rejected.

If this has happened to you, don’t panic, experts say. Your credit isn’t doomed, unless, of course, your credit report is showing other problems, such as loans in default, judgments or other delinquencies. But it will take patience and persistence to get legitimate matters cleared up.

After all, it’s the information in your credit reports that feeds the creation of your credit scores, which is what most lenders use to make their determination on whether or not you are creditworthy.

“Some consumers have heard so much about how difficult the (correction) process can be that they decide they don’t even want to deal with it,” says John Ulzheimer, who has been an expert witness in more than 150 credit-related cases. “That’s a mistake, because that information is being used by lenders, insurance companies and employers every day to make decisions about you.”

Here are the steps you need to take to fix costly credit report errors so you can get the credit score you deserve:

1. Request your credit report

You can get a free credit report once a year from each of the three major credit bureaus — Equifax, Experian and TransUnion — at AnnualCreditReport.com.

That’s the only site where you can get the reports for free under the law. Financial advisors say it’s a good idea to check your reports at least once a year. Many other sites offering “free” reports have strings attached.

Even if you’ve already obtained your report for the year, you’re entitled to another free report under the law if you believe your file is inaccurate because of fraud or if you’ve been denied credit, insurance or employment within the past 60 days.

Ira Rheingold, executive director of the National Association of Consumer Advocates, says to make sure you request reports from all three organizations because they frequently contain different information.

2. Gather documents to support your case

If you find a mistake in your report, start collecting evidence to prove the information is incorrect. That might mean hunting down a document that shows you closed an account on a specific date or finding a canceled check that shows you made a payment.

Also review your report closely for misspellings, wrong dates of birth or incorrect addresses that may indicate an identity mix-up. Because the agencies have fairly loose matching criteria to allow for data entry errors, it’s common for the files of two people with similar names to end up merged, Rheingold says.

“A lot of people think their identity has been stolen, but often it’s the credit bureau mistakenly merging files,” he said. “All they need to have is seven of the nine digits of your Social Security number and a similar name.”

3. Draft a clear, comprehensive dispute letter

You can start with this sample letter from the FTC, but you could include even more information as needed.

Clearly identify each item in your report that you dispute, explain why you’re disputing the information, cite any attached supporting documents and request that the item either be removed or corrected.

“Disputes need to be specific,” says Rod Griffin, director of public education for Experian. “For example, it’s important to state ‘the account is not mine,’ or ‘the account payment was never late,’ or ‘the account is fraudulent.’”

Leonard Bennett, a consumer lawyer in Newport News, Virginia, who helps clients get credit errors fixed, recommends including a copy of your credit report, with every error highlighted and circled, along with copies of all supporting documentation.

He also suggests having your letter notarized and providing a copy of your driver’s license and a utility bill as proof of your identity. “Very often, the bureaus will reject a dispute simply because they conclude that they need more identification,” Bennett says.

4. Avoid the online complaint form

You may be tempted to use the bureau’s convenient online dispute form, but experts say that’s not a good idea. The online form requires you to choose from a list of specific problems that may not fit your scenario, allows only a limited amount of space for explanation and typically receives less attention than a written complaint.

“In nearly all instances, online disputes are handled only by a computer and without human review,” Bennett says. In addition, if you send your letter by certified mail, return receipt requested, you can prove it was sent and received.

If the error shows up on the reports of all three credit bureaus, Ulzheimer and Rheingold recommend sending a separate complaint to each one, even though they are supposed to inform each other about any errors that they find.

The reporting bureaus are also obligated by law to forward your information and complaint to the bank or debt collector that reported the debt (often called “the furnisher”), which is required to do its own investigation.

Until recently, the bureaus simply had workers read your letter and boil it down into a two-to three-digit computer code, add a short summary of your complaint and forward that to the furnisher.

They now have a system that allows them to forward your full complaint letter and documentation as attachments, but experts say it’s still a good idea to send a fourth copy of your complaint to the furnisher yourself to get their attention and make sure they see everything.

5. Keep a paper trail, wait for a response

Under the Fair Credit Reporting Act, the bureaus are required to investigate error claims. However, it’s unclear how thoroughly they investigate. “We’ve seen a lot of reports that they spend only three to five minutes on,” Rheingold says.

“They have this automated system where you send in a dispute, it’s turned into a computer code, sent to the furnisher and then it gets sort of parroted back to you in a denial, and nothing is really investigated or solved,” he says.

The bureaus have 30 days to respond under the law, but because the process is so automated, most consumers hear back within a few weeks. Meanwhile, make sure you keep your paperwork and keep it organized.

“If you do end up having to go to court, you need to be well documented,” Ulzheimer says. “Create a file, keep copies of all of your supporting documents and of all correspondence to and from each bureau.”

If the bureau makes a correction to your report as a result of their investigation, it should send you a free copy of your new, corrected report. You can also ask the bureau to send notices of the correction to any company that has received your report in the last six months.

6. What to do if your complaint is denied

If your request for a correction was turned down, you still have options. You have the right by law to file a 100-word written statement of dispute that will be included with your credit report so anyone who accesses it can read your side of the story.

You can also file a complaint with your state attorney general’s office and with the Consumer Financial Protection Bureau (CFPB).

“That can be helpful because the CFPB has regulatory authority over the reporting bureaus, and the fines they’ve leveled against other companies have been colossal,” Ulzheimer says. “The agencies have no interest in being on the wrong end of a CFPB fine. So it’s like bringing your bigger, stronger brother to the fight.”

If it’s a serious error, you may want to consider hiring an attorney to take your case — you can find a lawyer experienced in this type of case at the National Association of Consumer Advocates. Keep in mind that, under the law, you must file an official complaint with the credit bureaus before you can take legal action.

Most lawyers take these cases on a contingency basis, so it shouldn’t cost you anything. In some cases, the damage can be huge.

One jury awarded an Oregon woman $18 million for an error a credit bureau wouldn’t fix despite two years of complaints, although a judge later reduced that amount to $1.62 million.

“Keep in mind that most of these cases settle out of court for a small amount of money, but for most people, that’s OK. What you really want, after all, is to get your report corrected,” says Ulzheimer.

Bottom line

Check your credit report frequently so you can find and correct errors. It might be a rather difficult process but it’s well worth it since lenders use that information to gauge your creditworthiness.