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Correcting a Credit Report
According to a 2002 Study by the Consumer Federation of America, significant discrepancies exist among the three credit bureau files of many consumers. Credit reports are often inaccurate, but under the Fair Credit Reporting Act you have the right to dispute the accuracy of any information in your credit report.
Follow these steps to correct your credit report:
Do this for the reports from all three of the credit bureaus:
1. Review your report and make a list of everything that's either incorrect or out-of-date, including:
- A wrong date or late payments you made on time
- Accounts that don't belong to you or don't exist anymore
- Negative information older than seven years (bankruptcies older than 10 years)
Incomplete personal information like your address or employment information (NOTE: if you have old accounts on your credit report, but the accounts reflect positive payment information, don't request removal of those positive accounts from your credit report. Credit scoring models generally provide higher scores to customers with a long, established record of positive payments. Removing good accounts from your credit report, even if they're out of date, will likely hurt your score.)
2. Send the credit bureau a letter listing each inaccurate item with an explanation of what is wrong.
View sample credit bureau dispute letter.
3. Once the credit bureau receives your request, they should respond within 30 days. If they don't respond within 30 days, send them a second letter
View sample dispute follow-up letter.
The credit bureau's response will be one of the following:
If your request is verified, the credit bureau will correct your report. It will take at least 30-60 days before you will see changes in your credit reports and scores.
If the bureau can't verify your corrections as valid or invalid, they're required to make the corrections to your report. This can happen when the creditor is no longer in business or no longer has records of the transaction.
If the bureau can find information proving your request is invalid, the report will remain unchanged.
4. If for some reason the credit bureau doesn't make the corrections you requested, contact the creditor directly and ask them to explain anything you don't understand and to make the corrections.
5. If neither the credit bureau nor the creditor will make the corrections, you have a right to include a brief corrective statement in your report.
Contact the credit bureau to add your statement, which will probably be limited to 100 words. The statement won't affect your score, which is usually the first screener that lenders use to evaluate your credit. Keep in mind that creditors rarely read credit files and therefore may not see your comments. They also tend to lend more credibility to the credit bureau than to the consumer.
Paid Credit Repair
You can pay "credit repair" firms to correct your credit report errors. However, be mindful that these agencies cannot do anything legally that you cannot do yourself. Be careful about some of the scams regarding so-called "credit repair" firms:
If the agency suggests that you create a new Social Security number, Employer Identification Number, or a Taxpayer ID number -- don't do it. They're essentially trying to create a new identity for you in order to dodge your old credit. Doing this is a felony, and if you use the Internet or telephone to do it, you can be charged with racketeering. Getting yourself into further trouble is no way to handle your debt.