Just like your Social Security number, your credit report is essential to achieving the American dream, detailing your borrowing history, payment track record and credit use. A good credit report can lead to a higher credit score, which can enable you to buy a nice home, reliable car and take out loans for a college education.
An error in your credit report, like incorrect account information or fraudulent charges, can impact your financial health, causing higher interest rates or loan denials if the issue isn’t resolved quickly. Complaints about mistakes on credit reports increased by two and half times between 2021 and 2023.
Knowing how to check your report and dispute errors can help you avoid negative issues with your credit and set you up for financial success.
What are the Most Common Credit Report Errors?
A credit report error is any incorrect information or inaccuracies in your credit history records. Reports are usually kept by the three credit reporting bureaus–Equifax, Experian and TransUnion. The most common errors to look out for on your credit report include:
- Incorrect personal information. This includes wrong names, addresses or Social Security numbers.
- Outdated account status. Accounts that are incorrectly marked as open or closed.
- Wrong account details. Mistakes in account balances or credit limits.
- Accounts reported multiple times. The same debt is listed more than once.
- Accounts of a namesake. Credit activities of someone with a similar name.
- Fraudulent activity. Unauthorized accounts opened due to identity theft.
- Data management errors. Mistakes made by credit bureaus in compiling information.
- Record of late payments. Incorrectly reported late or missed payments.
Why Dispute a Credit Report Issue?
If you notice a mistake on your credit report, you might think it’s not worth the hassle of disputing it. Dealing with credit reporting agencies can require several steps to resolve the problem. But trust us, the benefits to your credit score make it worthwhile:
- Better loan approvals. Correcting errors improves your credit score, increasing your chances of loan approval.
- Lower interest rates. A higher credit score can qualify you for lower interest rates, saving you money on high-balance loans or lines of credit.
- Access to better credit offers. With a clean report, you’re more likely to get better credit card and loan offers, which can help you pay off a maxed-out credit card.
- Protection against identity theft. Disputing unfamiliar accounts can alert you to potential fraud, helping you take action early.
- Peace of mind. Knowing your report accurately reflects your true financial standing.
How Do I Dispute an Error in My Credit Report?
Disputing an error in your credit report may differ slightly depending on which agency you report it to, but most follow a similar process. Here are the steps you need to take to report the error and have it addressed:
- Obtain your credit report. Request a free copy from Equifax, Experian and TransUnion. You’re entitled to one free credit report from each bureau every week.
- Identify errors. Review your reports carefully for inaccuracies like incorrect personal information, account status, balances or fraudulent accounts.
- Prepare a dispute letter. Write by letter to the credit bureau, clearly identify each error, why you dispute it, and request removal or correction. Include your complete contact information. Filing a dispute with each credit bureau, instead of the lender or bank, offers protections governing how quickly it must be handled. It also provides a legal pathway to sue the credit bureaus and creditors or collectors, if necessary.
- Send your dispute directly to the credit bureaus by certified mail. Avoid using forms and language directly from the credit bureaus’ websites because they might oversimplify your dispute by forcing you to make predetermined claims. You may also want to avoid submitting a dispute online through the credit bureaus, as you may unknowingly waive your right to sue as an individual or class action.
- Keep records. Maintain copies of your dispute letter and supporting documents, such as bank statements, proof of payment or credit reports highlighting the errors. This is important if your dispute escalates or requires follow-up.
- Wait for the investigation. The credit bureaus will start by checking the details with the company that reported the information. The credit bureau has 5 days to contact the company that supplied the information. After investigating, they’ll inform you in writing about the outcome. The credit bureaus generally have 30 days to look into your dispute and deliver a decision.
- Consider working with an experienced attorney. You have the right to sue a credit bureau or a financial institution over credit report errors. There are attorneys who can help you from the National Association of Consumer Advocates at consumeradvocates.org.
If the reporting company says their information is correct, you can still ask the credit bureaus to note your dispute in your credit file, which will be seen by anyone who checks your credit in the future.
Manage Your Credit With Helpful Tips from WorkMoney
Correcting errors in your credit report is critical for your financial health, impacting everything from loan approvals to interest rates. Understanding and managing your credit can open doors to better opportunities and allow you to pay off existing debt faster.
Join WorkMoney today to gain access to resources for improving your credit score, getting out of debt, or getting the best interest rates on student loans and auto insurance. With our partner programs and practical advice, we can help you achieve and maintain a healthy credit status for a bright financial future.