Correcting Credit Report Errors - on Your Own or Through Credit Counseling

Most credit counseling agencies can get your credit report when you seek out their help. They'll charge you a nominal fee, but that's to be expected. Also, if you request a copy of your report within 60 days of being turned down for credit, the credit bureau will send you a report for free. In addition, you can also get a free copy of your report once a year.

You can buy a copy directly from the credit bureau, either by mail, phone, or on the Internet, at any time. The three major credit bureaus are: Equifax, Experian, and TransUnion

Correcting Credit Report Errors

Under the federal Fair Credit Reporting Act both the Credit Bureau and the creditor who gave them the data are responsible for correcting information. First, dispute the debt directly with the creditor, then write a letter to the credit bureau. Include your name, address, and why the debt information is incorrect. List all the important information such as the amount, creditor, and account number.

Attach copies of any documents you have which prove the debt is wrong. Make a copy of your credit report, circle the disputed items, and attach that to your letter. Send it certified mail, return receipt requested, and keep a copy for your records.

The credit bureau is required to investigate the dispute within 30 days and send your information to the creditor. If an account listed for you belongs to another person, it has to be deleted. If an item is incomplete, the credit bureau must complete it. The credit bureau will send you a letter regarding the outcome of the investigation. If they find the debt was wrong, they will send you a free copy of your credit report with the correct information.

The creditor is required to notify all nationwide credit bureaus, so your report will be corrected everywhere. If the credit bureau changes or removes an item you disputed, they can't put it back on your report unless your creditor later proves it wasn't wrong and you really owe it. If that happens, the credit bureau has to send you a written notice including the name, address, and phone number of the creditor.

If the credit bureau makes corrections, it's a good idea to ask them to send notices to anyone who got your report in the past six months. You can also request a corrected copy of your report sent to anyone who accessed it in the past two years for employment purposes. If an investigation does not resolve your dispute, ask the credit bureau to put your statement about the debt in their file and in future reports. That way anyone accessing your credit report for employment or credit purposes will be aware of the dispute.

Getting Your Credit Scores

Many consumers are concerned with their credit score. They call them "FICO scores" because Fair, Isaac, and Company developed the software. FICO scores are calculated from your credit report.

There are five factors:

(1) 35% is from your credit history
(2) 30% is based on how much you owe
(3) 15% is based on the length of your credit history
(4) 10% is based on how many new credit cards you have
(5) 10% is based on the kinds of credit you use

The higher your score, the better credit risk you are. But creditors also use the reason codes which are included with each FICO score.

The ten most frequently given reason codes, which can cause you to be turned down for credit, are:

• Serious delinquency
• Public record or collection filed
• Derogatory public record or collection filed
• Time since delinquency is too recent or unknown
• Level of delinquency on accounts
• Number of accounts with delinquency
• Amount owed on accounts
• Proportion of balances to credit limits on revolving accounts is too high
• Length of time accounts have been established
• Too many accounts with balances

By paying close attention to your credit reports and scores, whether on your own or through a credit counseling service, you'll have a much better hold on your financial future. That can lower not only your bills, but your stress level, as well.

Credit Report Sources

United States Government. "Fair Credit Reporting Act." Federal Trade Commission.