Improving Your Credit Score: Fix the Mistakes in Your Credit Report
14 July 2006This post is the second in a series on improving your credit score and cleaning up your credit history. Part One dealt with the basics of what a credit score is, how it is calculated, and how you can request a credit report. This part deals with your first step: making sure there are no mistakes in your credit history.
You may be telling yourself that you know your credit is fine - you pay all your bills, you’ve never had a problem with anything, and you’re current on them all. This is NOT the case - mistakes are actually quite frequent, and many people check their credit reports only to find a mistaken report that they are deliquent in payment.
There are a number of reasons that you could have errors in your credit report. First is that many companies are simply incompetent. My most recent check of my credit report disclosed that my cable company had reported me for failing to pay a cable bill. They had been in error in billing me in the first place, because they mistakenly continued billing after I cancelled the service. Four months after I was told they had corrected the error, someone in their collections department forwarded a deliquent account notice in my name onto the credit agencies.
Second, sometimes you will find that you are signed up for something you didn’t think you were. Another mistake I discovered was that I had a credit card, unknown to me, which had been open for 6 years. I had filled out a “survey” in college to get a free T-shirt, and wound up with a Discover card in my name as well - without ever being contacted about it.
Third, there is a risk of identity theft. People may use your name or social security number to sign up for lines of credit, or they may use them to get water, power, or other services turned on. When they don’t pay the bills, you get a bad mark on your file - and no one ever gives you a heads up if you don’t request the credit report. Think that’s not going to happen to you? You can read more about it here. Tens of thousands of people have had this happen to them, mainly because illegal immigrants to the U.S. have begun using real people’s Social Security numbers in an effort to qualify for various kinds of services. They buy real social security numbers on the street - and yours could be one of them.
Fourth, sometimes overaggressive collection agencies will report people they shouldn’t. Many times debts which are not really owed will be forwarded on to unscrupulous collection agencies which use your credit as a tool for blackmail to try to get you to pay.
So what can you do about mistakes on your credit report?
If you’ve reviewed everything carefully, and found a mistake, you’ve got to dispute the information. There are two pathways you’re going to have to use.
First, you need to contact the person who is reporting this information to the credit agencies. If it’s a company that has made a genuine mistake, they will usually retract the information from the credit agencies themselves. MAKE SURE THAT IF IT’S AN ERROR, IT GETS REPORTED AS ONE. If you genuinely didn’t owe a debt, you do not want it reported that you paid or satisfied it - you want the company to acknowledge its error. The reason is that if your credit history shows that you were deliquent in paying something you owed, but then later satisfied the debt, your score will be lower - it will reflect your original failure to pay what you “owed.” If you didn’t owe it, don’t let the company report that you “satisfied” the debt.
You also need to request that the company send you a letter acknowledging its error. You want something in writing - if the company had problems in the first place, how do you know they’ll get things right later on? What if their report to the credit agencies doesn’t properly retract the information? Getting it on paper covers your rear in case they make MORE mistakes. It also gives you something to show anyone who looks at your credit report in the meantime - it can take 30 to 60 days for the errors to get corrected.
You also need to know that if you are dealing with a collection agency, more restrictive rules apply. Go here and read up on the Fair Debt Collection Practices Act - it only applies to third party debt collectors, and not the company you owe the debt to, but it imposes a number of restrictions on what they can do - and gives you a legal remedy if they don’t meet them.
The second step is to contest the errors directly with all three of the credit agencies. You’ll need to have requested a credit report with them first - if you find the problem with one agency, you still have to get reports from the others. This means you have to either use your one free annual credit report to do this or buy a credit report from the other two. If you have been denied credit, however, you are also entitled to a free report if you act within 60 days.
There is an excellent, comprehensive guide on how to do this from the FTC, which you can access here.
You can either do this in writing, as the FTC recommends, or go online to the web sites of the three credit agencies. These sites are:
Each site has an online form you can fill out, granting you a limited space to explain why you think there is an error. Personally, I would recommend going with both routes, just to be safe. They will investigate, and it generally takes a month or so for them to complete this and fix the report if it is in error.
What if I’ve been the subject of identity theft?
You have a much harder path. In fact, the credit agencies often won’t really fix it if another person is using your social security number. There is another government site on how to deal with identity theft here - you can’t just fix the errors in your credit report. You’re going to have to do something to stop the fraud from happening again - which will mean closing accounts and contacting the police.
Discuss this in the Free the Drones forums here.
One Response to “Improving Your Credit Score: Fix the Mistakes in Your Credit Report”
July 21st, 2006 at 2:46 pm
[...] This post is part three in a series on improving your credit score. Part One dealt with the basics of what a credit score is, how it is calculated, and how you can request a credit report. Part Two gave advice on how to correct errors in your credit report, so that you can fix any problems that aren’t your fault. [...]