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How to Dispute Credit Report Errors – A Definitive Guide

A Guide to Dispute Credit Report Errors

According to a study conducted by the Federal Trade Commission (FTC), 26% of credit reports examined included at least one “potentially material” error in one or more of the three credit reports from Experian, TransUnion or Equifax. Some of these errors can negatively affect a consumer’s credit score by up to 100 points. This is why it is crucial to check over your credit reports at least once a year to make sure all the information presented is accurate and up to date.

Most people don’t understand how credit inquiries affect their credit report. It’s true that some credit inquiries affect your report. These are called “hard” inquiries and they occur when you request new lines of credit. If you’re seeing lots of credit inquiries for new lines of credit on your credit report and you don’t remember making them, it’s something to start looking into. It’s possible that someone is testing the waters for stealing your identity. On the other hand “soft” inquiries don’t affect your credit rating at all. If you request your credit report from one of the three US credit bureaus it will not count against you as you are entitled to this information.

The Wrong Identifying Information?

A lot of people look at their credit report and are shocked to see that the wrong information is on there. For example, you might have the wrong address or a misspelled middle name. None of this means that your credit has been negatively affected, nor that you’re a ripe target for identity thieves. In most cases, it’s a totally benign human error—one that you need to immediately fix.

Incorrect Balance Information

When checking out your credit report, a lot of people notice that their balances are not accurate on the report. Your lenders generally transmit information about your balance to the credit reporting agencies once a month. This means that by the time you see the information, it could already be several weeks old. The only time that you would need to worry about this is if you’re applying for a home loan or refinancing your current mortgage and need your balances as low as possible to earn higher credit scores. Ask the lender you’re applying with to contact the credit bureau directly for a “rapid rescore.” The only downside? You might have to pay an additional fee.

Old Information

Your credit report is a biography of your credit, though the warts are generally removed. What’s not removed? The good stuff. It’s a commonly held belief that information drops off your credit report every seven years, but technically speaking this isn’t actually true. Good account history on your credit report will stay for as long as the account is open, and ten years from the date the account is closed. What’s more, this isn’t a problem—it actually helps you. What should be off your credit report after seven years? Most negative information — late payments, collections, charge-offs, foreclosures, and any debt that has been discharged in bankruptcy or debts that are severn years old or more. These are the ones that you need to start fixing, not old debt that you responsibly paid off.

Errors to Take Care of Right Away

Errors that you should be concerned with, and should be addressed right away, include:

  • Late Payments: If your bills are paid on time, but they’re being reported as late payments, you need to contact the company and find out why. How you pay your bills makes up over a third of your credit score and paying on time is good for your credit. Paying late can severely impact your credit scores. Late payments are not reported to the credit agencies until you’re 30 days late. Hit that 30-day threshold, however, and it will be noted in your credit file. If you reach 90 days of nonpayment, that’s when your credit reports and scores will really take a hit—and the damage that’s inflicted on your credit report at this point could follow you around for up to seven years.
  • Collections: If you find collection accounts that you don’t recognize, and believe that they’re being reported in error, you’ll want to investigate.  If it’s an error, you can file a dispute to have it removed. If you find out that it’s yours, start asking yourself if you can afford to pay it. If possible, negotiate a settlement with the collection agency to pay the debt for less than you owe. Before you offer to pay, however, it’s a good idea to check the statute of limitations for debt collection in your state. If the statute of limitations has passed, the collector has no legal right to collect. While it will remain on your credit report for seven years, many states have statutes of limitations that are less than that.
  • Judgments and Liens: You wouldn’t be the first person to get a judgment or a lien without proper notification. This is the type of thing that you need to take action on immediately, before you wake up to an empty bank account after a collector has seized your account. If you have paid your tax lien in full, you’ll need to request that the lien be withdrawn. Once the lien is withdrawn, you’ll need to notify the credit reporting agencies and request that they be removed. Otherwise, the even paid tax liens will remain in your credit report for seven years. And if you never pay? Well, that’s a blemish that stays on your report forever.

When it comes to correcting credit reports, the process can be confusing and missteps can easily delay the correction of inaccurate information. Here’s a step by step process that should help clear things up a bit.

Step 1: File a Dispute

You communicate with the credit reporting agency(cies) that you disagree and formally dispute an item on your credit report(s). This can be done in writing, on the phone, over the Internet, or in person. It’s important that your dispute is clearly written in a way that a layman would understand it. For example, “I disagree with my credit report” is not a dispute. “I was never late on my XYZ Bank account, please correct my credit report” is a dispute. This is where your involvement ends and the “system” takes over.

Step 2: The Investigation

The credit reporting agency will send a form to the furnisher of the disputed information. The form is called an ACDV, which stands for Automated Credit Dispute Verifications. This ACDV form is then sent to the furnisher of the disputed information via an Internet based system called e-OSCAR, which stands for Online Solution for Complete and Accurate Reporting.

Step 3: Verification of Dispute

The data furnisher (normally a lender or collection agency) receives the dispute and “processes” it. Basically the data furnisher confirms that what they sent to the credit bureaus is correct or incorrect by reviewing their records. If they believe what they sent is correct then they respond, via e-OSCAR, that what they sent is correct and no changes should be made. If, however, they determine that what they sent is incorrect they’ll make corrections and the consumer’s credit reports will be updated.

Step 4: Investigation Closed

The credit bureaus will now either update the consumer’s credit reports –or not, based on the data furnisher’s response. Either way, the credit bureaus will send the consumer a communication, normally in the mail, giving them the results of the investigation within 30-45 days.  At this point the industry considers the dispute closed.

This four step process outlined above rings true for all three major US credit bureaus. That being said, there are some minute differences that you should know about to make it easier for you to file a dispute if and when the time comes.

How to file an Equifax online dispute

Equifax has streamlined the process into a user-friendly online format. You can pull up your credit report online to review the information and file the claim right then and there. By visiting the Equifax website you have two options:

  1. Begin a new dispute
  2. Check the status on a current dispute

How to file a dispute with Experian

Experian also has a quick and easy online service form to file a credit report dispute, and much more. With this online feature you can also check the status of an existing dispute or a past, closed dispute and you can verify your credit history.

How to dispute TransUnion credit report

TransUnion also allows consumers to report disputes online with the quick and easy TransUnion online dispute form. But they also offer a toll free customer service line through which you can file a claim or you can send in your dispute via snail mail. Having these options readily available is comforting as you have different ways of checking the status of your claim.

Helpful Credit Dispute Tips

Now that you have a general understanding of the dispute process, we asked John Ulzheimer, Credit Expert for Credit Sesame, to tackle ten of the most common consumer questions when it comes to correcting credit report errors. Heed his expert advice and you’ll improve your chance of clearing any mistakes from your credit profile.

Q: Do I have to buy a credit report in order to dispute the information it contains?

A: No, you are not required to buy a credit report in order to file a dispute. You can claim your credit reports for free at AnnualCreditReport.com and file your dispute based off of the information on those free reports. You should be checking your credit report at least once a year. Better than that is three times a year; once each from the three major credit reporting agencies (Equifax, Experian & TransUnion).

Q: How long do the credit bureaus have to complete their investigation pursuant to my dispute?

A: The credit bureaus have 30 days to complete their work, although in most cases it doesn’t take nearly that long because of automation. However, if you submit supplemental information during those first 30 days, then the bureaus have an additional 15 days to complete their work.

Q: Can I lie to the credit reporting agencies about the accuracy of credit entries in an effort to get them removed?

A: That’s a very bad idea. It’s best to be honest in your dispute communications with the credit bureaus. Claiming that items are not yours when you know very well they are can be a criminal act.

Q: I’ve heard that when items are in dispute they cannot hurt your credit scores. Is that true?

A: Yes, that’s true. When a credit entry is in dispute it is coded as such by the credit reporting agencies. This code prevents the item from being considered in the “Payment History” and “Debt” categories of your FICO credit score.

This is also true of the newer, but increasingly popular, VantageScore credit score. According to Sarah Davies, Vice President of Analytics and Product Management at VantageScore Solutions, “While an account is documented as ‘Account information disputed by consumer under the Fair Credit Reporting Act’, it is temporarily excluded from consideration by the VantageScore model.”

Q: If an item is deleted because of a dispute can it be reinserted after the fact?

A: Yes, if the disputed item is removed it can be reinserted by the lender or collection agency at a later date. However, if the information is reinserted, the credit reporting agencies must notify you. One of the myths about disputing credit report errors is that once an item has been removed that it is gone forever. That’s not always the case.

Q: How much does it cost to dispute my credit reports?

A: Keep your wallet in your pocket because you’re not going to need it. Filing credit report disputes is a free service offered by the credit reporting agencies.

Q: Will the credit bureaus let me know the results of their investigation?

A: Yes, once the credit bureaus have completed their investigation work they will send you a summary of the results. They’ll let you know if the items have been removed or will remain. By law, they must resolve and respond to you within 30-45 days.

Q: If I’m not satisfied with the result of the dispute can I dispute the items again?

A: Yes, you can re-dispute the items but if they were verified once they’re likely to be verified twice. If you have supplemental information supporting your dispute, now is the time to use it. If you simply re-dispute the item over and over the credit bureaus can eventually consider it to be frivolous and stop investigating the item.

Q: Do I have to file disputes with the credit bureaus or can I dispute the item with the bank or collection agency?

A: Consumers have the right to file credit-reporting disputes with both the credit bureaus and the companies that furnished the questionable information, which is typically a lender or collection agency. The furnishers have the same obligation as the credit bureaus do to investigate and correct mistakes.

Either way, it’s in your best interest to be very specific about why you’re disputing something on your credit reports. If it’s not your account, be clear about that. If the balance is wrong, be clear about that. If the late payments are incorrect, be clear about that. Don’t send a dispute that reads, “I don’t agree with how that account is reported” because you’re not directing the credit bureau on how to challenge it with the lender. You need to clearly identify why you believe it’s incorrect.

Q: Can I dispute my credit score?

A: No, you cannot file a dispute with the credit reporting agencies and have them investigate your credit scores. So, if you’ve got VantageScore 720 and you think you should have VantageScore 820 there’s nothing the credit bureaus are going to do for you.  If you’ve got FICO 650 and you think you deserve FICO 750, again, the credit bureaus aren’t going to help. Additionally, this means you cannot dispute credit report letter as it is merely another way to measure your credit score.

Your credit score is not a permanent component of your credit report. It’s an ancillary product sold along with your credit report.  As such, you cannot dispute your credit score because, technically, it’s not part of your credit report.  That’s the same reason you’re not entitled to a free credit score once every twelve months like you’re entitled to a free credit report.

Another thing to consider is that the credit bureaus aren’t the ones responsible for your credit scores. I know that seems strange but the two primary credit scores used by lenders were actually developed by companies that aren’t credit bureaus.  FICO develops the FICO credit score and VantageScore Solutions develops the VantageScore credit score.

Now, if you’ve got scores with which you don’t agree, there is something you can do about it. When you get your scores, whether it’s from a Score Disclosure Notice or from another place like CreditSesame.com, they are almost always accompanied by what’s referred to as score factors, which look like this:

Score factors are the top reasons why your scores aren’t higher. Even solid credit scores will have score factors if there’s room for improvement. These score factors are your roadmap to higher credit scores. They will identify exactly where you need to improve in order to earn higher scores.

Key Contact Data

Federal Trade Commission consumer response center (202) 326-2222
Equifax P.O. Box 740241, Atlanta, GA 30374  (800) 685-1111
Experian P.O. Box 9556, Allen, TX 75013  (888) 397-3742
Trans Union Corp. P.O. Box 2000, Chester, PA 19022  (800) 916-8800

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One response to “How to Dispute Credit Report Errors – A Definitive Guide”

  1. S. Danae says:

    I find this to be an excellent article on how to dispute credit inquiries. I recently had to go through this process and wish I had seen this – it would have saved me many hours waiting on hold on the phone not to mention a headache or two! Best advice: always keep track of the communication you have with the credit bureau in as much detail as you can.

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