Buzz
Mistakes on credit reports are incredibly frequent, making them the top complaint on the Consumer Financial Protection Bureau’s website, as revealed in a 2017 study by LendEU, a student loan refinancing firm. Though you may see them as mere inconveniences, these mistakes can have significant impacts on your financial health.
For example, more than 70% of people who are rejected for a mortgage do so because of a low credit score, which often results from inaccuracies on their credit reports. As the Federal Reserve Bank of New York reported, only 9% of mortgages were approved for individuals with subprime credit scores in the second quarter of 2017. In short, errors on your credit report could seriously hinder your chances of getting a mortgage.
However, there are steps you can take to eliminate negative marks from your credit report, even though it may be a hassle.
Examine the report’s history
Most negative entries will remain on your credit report for seven years, with the exception of bankruptcies, which stay for 10 years. After that, the information should disappear from your report—unless the credit bureaus have recorded an incorrect date for the debt, in which case you'll need to provide evidence of when the debt occurred (see below for instructions).
However, the process can get complex and varies depending on your state, so check out this report from Credit.com for more detailed information on the subject.
Closed 'good' accounts typically drop off your report after 10 years, according to Credit.com, but positive entries generally remain on your report indefinitely.
Review your three credit reports
Your credit reports from Equifax, Experian, and TransUnion will likely differ from one another and may list different debts or contain errors. You can get a free copy of each once a year at AnnualCreditReport.com. If you find inaccuracies, reach out to the respective bureau to have them corrected—they offer simple, step-by-step instructions on their websites (Equifax, Experian, TransUnion), or you can submit a complaint by certified mail (the Federal Trade Commission and CFPB provide sample dispute letters for you to use). Your letter should include the following, as specified by the CFPB:
Your contact details, including full name, address, and phone number
Report reference number, if available
Clearly list each error, such as the account number of any account you are disputing
Provide a clear explanation of why you are challenging the information
Request that the information be either corrected or removed
Attach a copy of the section of your credit report that shows the disputed items and highlight or circle the errors. Be sure to include copies (not the originals) of any documents that support your claim.
Keep a copy of the letter for your records. The bureau is required to investigate within 30 days and send you a response. If the bureau finds that your report was incorrect, they must notify all the credit reporting agencies to correct the information.
You can also send a letter to your creditor, such as your credit card issuer or landlord, informing them that you are disputing the error on your report. The CFPB offers a sample letter for this purpose as well.
Reach out to federal regulators
If contacting the creditors does not resolve the issue, you can file a complaint with their regulators or submit a complaint to the CFPB.
Once again, you should send a complaint via certified mail to the creditor’s regulator and retain a copy for your records.
Involve a lawyer
Even after all these steps, mistakes might still linger on your report: In 2015, the FTC revisited a 2012 study and found that out of 121 consumers who had unresolved disputes on their reports in 2012, 84 (around 70 percent) still believed there were errors. This highlights that the process can be lengthy.
Why does this occur? Because the credit bureaus simply aren’t overly concerned about errors affecting your credit. “The credit bureaus don’t want to invest in investigating disputes because there’s no profit in it for them,” Chi Chi Wu, a staff attorney at the National Consumer Law Center, told Time in 2012. “That’s why they’ve automated the dispute process to such an extent.”
Hiring a lawyer or a credit repair agency may cost hundreds of dollars, and there’s no guarantee of success. However, if you're on a tight deadline—like trying to close on a house—this could be worth considering.
