How to Correct Damaging Errors on Your Credit Report

Although you may never have to take action to remove negative information from your credit report, you should also be aware that errors do happen from time to time. If you ever discover an item that needs correcting, you will want to be armed with the advantage that only preparation beforehand can provide. This is necessary for your financial well-being because these mistakes are often uncovered for the first time when people make a major purchase, such as taking out a mortgage, applying for a car loan, or starting a business.

Where errors can be found

- Obtain your credit reports from the three major reporting agencies (Experian, Equifax and TransUnion) and look carefully for any inaccuracies and negative records that could lower you credit score. Even though records of your loan and credit applications will stay on your credit report for a year or two, requesting this information yourself will not cause this damaging type of inquiry, and you should feel free to do this when the need arises.

- Look for items on your credit report (collections, bankruptcy, tax liens, charge-offs, judgments. closed negative accounts and repossessions), if any, that have now expired and should have been removed automatically. At the same time, you can correct charges made by someone else in your name, any data errors that you discover, and records that actually belong on another person's report.

What you can do

- If you are certain that you have found some kind of error in your credit report, calm down, focus on the facts, compose a "letter of dispute" to the Dispute Investigation Department of the credit reporting agency in question, and keep a copy for yourself. This is the first step in having the related information investigated and the errors corrected on your report. (This process will work with TransUnion and Equifax, but Experian only accepts such requests online.)

- To strengthen your case, include as much background information and written proof of the facts as you can because the credit bureaus are free to ignore any requests that appear to be without merit.

- By law, they must finish their investigation of your dispute within 30 days and correct your report as needed. Once they have done this, they will inform you of the outcome and provide details as well. If you don't succeed in resolving a dispute with your initial request, you are also free to submit the disputed item again if you can provide additional documentation to back up your claim.

- As another means of solving such a problem, you can also deal directly with the creditor that forwarded the data to the credit bureau. This may be your best option because once that creditor has the correct information that you supplied, they can notify all three credit bureaus, and their word will be more convincing than yours as a private individual.

Avoiding a new problem

While you can't be certain that you will get a speedy response from any credit bureau, don't become impatient and resort to contacting some expensive "credit repair" company for assistance. They have no more authority than you do in this area, and you will be receiving second-hand information whenever they report to you.