The importance of your Experian, Equifax, and TransUnion credit reports cannot be understated, as all credit scores are based on the information in these reports and your credit standing dictates the credit card and loan terms that you qualify for, where you are able to live, the car you drive, and even the jobs you can get. But while certain types of information should be included in your credit reports, errors are not among them.
Credit report errors are unfortunately an all too common fact of life, however. The Federal Trade Commission estimates that roughly 1 in 5 people (or about 42 million Americans) have an inaccurate credit report, and other studies indicate that the prevalence of credit report mistakes is even higher. For example, the non-profit group American Consumer Credit Counseling pegs the error rate at an astounding 90%.
“It is true that there are many errors in credit reports,” says Brenda E. Castañeda, an attorney in the Charlottesville office of the Legal Aid Justice Center and a lecturer at the University of Virginia School of Law. “Credit bureaus repeatedly fail to make corrections even when they themselves acknowledge inaccuracies in a consumer’s report.”
Unfortunately, all it takes is a single critical error on one of your major credit reports for a lender, landlord, employer, or other decision maker to decide that you aren’t trustworthy and to either deny your application or overcharge you.
This, of course, underscores the importance of exercising your right to a free copy of each of your three major credit reports once every 12 months through the government-sponsored website AnnualCreditReport.com. Reviewing this information, and taking advantage of other free credit reports on a regular basis, will enable you to spot potentially-costly mistakes before they can do too much damage, but the question of what to do about mistakes once you find them still remains.
So, how can you report and ultimately fix credit report errors? We answer that question and more below.
It’s important to note right off the bat that you cannot use the credit report dispute process to remove legitimate information from your files, even if it reflects poorly on your financial responsibility and is costing you money.
There are strict timeframes that dictate how long negative information must remain on your credit reports, and there’s unfortunately nothing you can do to expedite the process. If past financial mistakes were the result of extenuating circumstances, you may be able to explain your situation on the Personal Statement portion of your credit report. But other than that, if the information is accurate, you can’t get it removed.
“Fixing erroneous information on the reports can be hard because the credit reporting agencies won’t (and shouldn’t) erase an incident just because someone says it did not happen,” according to Michael Salinger, the Jacqueline J. and Arthur S. Bahr Professor in Management, Markets, Public Policy and Law at Boston University. “But it is worth being persistent if your record does contain false incidents of non-payment.”
With that said, there are a number of common credit report errors that are indeed disputable, including:
- Inaccurate Biographical Information (e.g. a misspelled name or outdated address)
- Duplicate Accounts (sometimes financial institutions or the credit bureaus mistakenly list credit or loan accounts multiple times; in other cases debt collectors will relist accounts in order to trick you into making a payment)
- Fraudulent Accounts (criminals are known to open financial accounts under people’s names, rack up extensive charges, and leave the victims to clean up the mess)
- Inaccurate Payment History (payments mistakenly listed as being late)
The source of the mistake doesn’t really matter as long as you have proof of its inaccuracy, but Dan Green, loan officer with Waterstone Mortgage in Cincinnati and author of The Mortgage Reports, says that creditors themselves are usually to blame. “Credit report errors often begin with the creditors — not the credit bureaus,” he says. “Credit bureaus are just a messenger.”
That, however, could be part of the problem. Prentiss Cox, co-director of the University of Minnesota Law School’s Law in Practice program, says credit bureaus simply have more incentive to meet the needs of their corporate clients than to prevent unnecessary consumer hardship.
“The only reason the agencies deal directly with consumers is that they are obligated to do so by FCRA and now the CFPB,” Cox told CardHub. “The companies paying for the service have an interest in accurate data, but only to a point and they are particularly interested in problems of overestimating ability to repay (i.e., erroneous reports of good credit) rather than errors tilting toward over-reporting bad credit. So the reporting agencies have little incentive to fix a few egregious errors that report a consumer’s credit history as worse than it actually is, particularly when the cost of detecting and verifying those errors is high.
It’s therefore on us as consumers to start cleaning up the mess.
“The credit bureaus rely on information available in public records. Oftentimes, that information is wrong or how it is reported is wrong. Unfortunately, it’s up to the consumer to monitor for errors and correct them,” says Jessica Gabel, associate professor of law at Georgia State University. “Moreover, there’s nothing that really polices the agencies to do their fact checking. If there’s a negative event found, it goes into the credit report. I’m not sure that more competition in the industry would really change much. They all have to get the information from the same places, and the time, money, and effort involved in verifying facts would probably be cost prohibitive, so we’re stuck with this system.”
Step 1: Contact the Source
Much like credit scoring companies get their information from Experian, Equifax, and TransUnion, these major credit bureaus base their reports on information from the financial institutions that actually extend loans and lines of credit as well as the court systems that hear lawsuits and lay out other judgments about amounts owed. The first step in the credit report error dispute process is therefore to contact the entity that the erroneous information originates from. You can find the relevant contact information online or on your monthly statement, if applicable.
Oftentimes, the error will be the result of an honest mistake and can be easily corrected with a quick phone call. If the outcome is positive, that’s great – it will make the dispute much easier for the credit bureaus to handle. You should still report the issue to them, however, because the information sharing processes between financial institutions and credit reporting agencies are so complicated and convoluted that an issuer correcting a mistake doesn’t guarantee that the change will be reflected on your credit files.
Step 2: Build Your Case
The major credit bureaus all track the same types of information, but that doesn’t mean your records from each will match up exactly. So while an error might therefore appear on only one of your credit reports, you should still check all of them to be sure.
You can dispute credit report errors online or by mail, and we’ll explain how each method works below. But regardless of the manner in which you report mistakes, you’ll need to build your case before bringing it to a bureau’s attention. Otherwise, you’ll just be wasting your time because the bureau will likely ask for documentation.
Here’s what you’ll need:
- A Copy of the Report Containing the Error (If Disputing By Mail): Print out your erroneous credit report(s), make copies, and note where the errors appear.
- Your Financial Records: You should gather all relevant financial records (e.g. monthly statements from the institution the erroneous information supposedly originates from) that prove your case. If Step 1 resulted in a favorable outcome, asking the financial institution for a letter acknowledging its mistake can go a long way.
- Correspondence Records: Whether you’re disputing online or by mail, you’ll want to keep copies of your dealings with the credit bureaus. This may entail printing an online dispute confirmation or making a copy of the letter you send to initiate the dispute.Such a letter should include your full name, your current address, the confirmation number for the report in question, and the account number of any relevant trade lines. You can find a sample credit report dispute letter below.
Step 3: Initiate the Dispute
Disputing credit report mistakes online is the simplest option, as the online version of each of your major credit reports will include a link that you can click to begin the process. Alternatively, you can visit each bureau’s online dispute page directly: Experian, Equifax, and TransUnion. The image below shows what this page looks like on the Experian website.
Once you arrive at this page and choose the option relevant to your situation, you’ll have to verify your identity and enter your report number. You’ll then be able to peruse your report, find the error in question, click the “Dispute” button on the page, choose the reason for your dispute from a drop down menu, and provide a short explanation of why you believe the information to be erroneous on the online dispute form.
After you submit your dispute, you’ll be redirected to a confirmation page, which you should print for your records. Once you’ve done so, it’s time to wait.
You can also dispute credit report errors by mail. To do so, send your dispute letter as well as the printed copies of your credit report(s) and your relevant financial records to the credit bureau(s) whose reports contain the errors.
|Credit Bureau||Mailing Address||Phone Number|
|Experian||Experian / P.O. Box 9701 / Allen, TX 75013||1-888-397-3742|
|Equifax||Equifax Information Services, LLC / P.O. Box 740256 / Atlanta, GA 30374||1-800-685-1111|
|TransUnion||TransUnion, LLC / P.O. Box 2000 / Chester, PA 19022||1-800-916-8800|
You can certainly give the credit bureaus a call in an attempt to initiate a credit report dispute by phone, but they’ll likely tell you that written correspondence and a certain amount of evidence are necessary.
With that said, it’s probably a good idea to call the bureaus once you have submitted your dispute form online or through the mail to ensure that they’ve received it and the process is moving forward. Credit bureaus aren’t always as responsive to reported errors as we’d like, after all.
“While errors will be made in any service company, what matters is how they handle it when errors are identified,” says Mary C. Gilly, a professor in the University of California, Irvine’s Paul Merage School of Business. “Credit bureaus need to be more responsive in fixing erroneous credit reports, and if they are not, regulation will follow.”
Step 4: The Waiting Game
Once a credit report dispute has been initiated, the respective credit bureau will contact the financial institution from which the information originates (i.e. the “furnisher”) in order to verify whether it is legitimate or erroneous. Information furnishers typically have up to 30 days (and in some cases 45 days) to respond to such inquiries, but the process takes an average of 14 days, according to Experian.
Step 5: Results
Once a bureau’s investigation is complete, it will mail you the results as well as e-mail you a link to where you can view the results online, if you file your dispute via the Internet. These results will lay out the bureau’s findings as well as the actions to be taken based on them (i.e. leaving your report as is or removing the error).
If your dispute results in changes to the information in your credit report, the credit bureau in question is required under the Fair Credit Reporting Act (FCRA) to send a disclosure of the change to anyone who has viewed your report in the past 6 months, upon your request. You can also request that updated copies of your report be sent to any potential employer that has viewed your report in the past two years. We definitely recommend making such requests if you believe that the mistake in question is adversely affecting you.
If you are unhappy with the results of the credit bureau’s investigation, you can always initiate another dispute, but keep in mind that this in unlikely to change anything unless you bring forth new evidence in support of your case.
You can also escalate your case to the FTC or the Consumer Financial Protection Bureau, if necessary. If a credit report error is serious enough, you may also wish to hire an attorney that specializes in such matters.
At the end of the day, mistakes on your credit reports should not be taken lightly given how much money and time they can end up costing you. So, if you believe your dispute to be legitimate, do not get frustrated if the process takes a while or you run into a few roadblocks along the way. Instead, trust the process and explore every option at your disposal.
This does not include paying credit “repair” services that promise miracle fixes. “A bad credit report and low score will drive some percentage of the public to take steps to fix it, where they are unable or unwilling to ‘fix’ it via the long and hard process of reducing debt, reducing the percentage of credit lines used, increasing income, etc.” says attorney Cary Flitter, a leading expert in consumer law. “Many credit repair places take advantage because they use unscrupulous methods to try to increase the credit score.”
Michael Salinger, a professor of management at Boston University and the former director of the Federal Trade Commission’s Bureau of Economics, adds: “There are a lot of fraudulent services out there offering to help people fix financial problems. When I was at the FTC, we sued a lot of them. But eliminating the fraudulent companies is like playing Whack-a-mole.”
So, remember: There aren’t any silver bullets when it comes to fixing credit report errors, and you’re better off saving the money.