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How Do I Dispute The Information On My Credit Report?

How Do I Dispute The Information On My Credit Report?

An accurate credit report is crucial to qualify for loans and receive the best interest rates. Over time, incorrect information will appear on an individual consumer's credit report either due to reporting errors by retailers and financial institutions or as a result of fraud or identity theft. Regardless of how the inaccuracies appear, they need to be corrected as soon as they are discovered. Good credit is often necessary to obtain employment or rent an apartment as well as provide access to financial opportunities so don't let bad information ruin a good credit report.

Reading A Credit Report

Credit reports have a number of different sections containing everything from personal information to existing lines of credit to legal judgments. Most inaccuracies revolve around transposing numbers or misspelling a street address or loan originator's name. A recent federal law was passed requiring each of the three major credit reporting agencies to provide one credit report for free every 12 months to consumers. The law was specifically meant to allow consumers access to their credit histories and to verify that the information listed is true and correct without having to pay for the privilege. Most consumers won't have legal judgments, liens or foreclosures listed in the third section of credit report but double check everything listed in the personal information section and credit section since it can affect your credit score.

Why Accuracy Matters

To say that an accurate credit report is necessary to function in a consumer driven economy would be an understatement. As already mentioned, credit reports are often pulled by potential employers when conducting background checks for job applicants. Credit reports are also used by landlords when selecting tenants for renting an apartment or leasing a house. Even without these considerations, inaccurate information on a credit report may lead to being declined for a store credit card or not getting approved for a mortgage or auto loan. Even if you are approved for a loan or credit card, inaccurate information will mean a lower credit score and higher corresponding interest rate costing you money.

One scenario is where a student loan could be reported as having an outstanding balance of $10,000 when in fact it was paid in full years ago. This one mistake can increase the debt utilization ratio reducing your credit score. If the amount is high enough and your available credit is low enough you could look like you're overextended and having financial difficulties which could be a precursor to bankruptcy. The student loan could actually be reported as being in default showing multiple late payments. All of this is possible as a result of a student loan that wasn't updated correctly by the lender on your credit report

Correcting Inaccuracies

Each of the credit reporting agencies, Experian, Equifax and TransUnion, provide online forms and information for disputing inaccurate information that appears on credit reports. Once the form and supporting documentation has been provided to the reporting agencies, they must address the dispute within 30 days informing the consumer of their decision. This is a legal requirement and failure to do so could legal action against the credit agency in question. Another option for disputing the information on a credit report is to contact the financial institution or corporation directly which had initially submitted the incorrect information. Depending on the situation, many organizations will update credit report information to correct any inaccuracies as necessary. While most consumers will be able to resolve their disputes using these two options sometimes legal representation will be required if your information is not updated in a timely fashion.