First, know your rights as a consumer regarding your credit (please see article Knowing Your Credit Rights as a Consumer).  Secondly, understand that disputing credit is a process of patience.  It takes time to improve your credit report/credit score, especially if you are trying to dispute information.  Below are the steps to take in disputing an error. 

1)  You need to obtain your credit report.  You can obtain your credit report from each of the three major credit agencies: Experian, Equifax and Transunion.  As a side note, if you are frugal like me and are just curious about your score, see my article (please see article How To Obtain Your Credit Report For Free).  If you don’t want to do it that way, you can purchase a copy of your credit report at Equifax Credit!

2)  Next, learn how to read a credit report.  Take your time to look over each report and you will notice different letters and numbers.  Each agency has their own way of articulating what the letters and numbers stand for.  Here is a basic way to figure it out without having their key.  Bureaus use a system of “I,” “R,” or “O” followed by a number from 0-9.  “I” usually denotes installment credit –such as a car or personal item.  “R” means the account is revolving – such as a credit card or department store.  “O” is an open account – you borrowed the money but are paying it back within a designated time.

The 0-9 system

1 = the best rating of all (means you have paid your bills on time)

9 = the worst, us, usually means the debt was not paid or written off (not paid on time or/and is late)

Credit Bureaus must provide you with assistance if you are unable to understand what is contained in your credit file.  You can call and ask for help.  Though, their guides usually are sufficient and once you get used to the terminology the reports are easier to read.

A rating of R1 or I1 is your goal.

3)  Now that you have all your information in front of you, if you find an error, here’s how to correct it.  If any account is missing that should be on there, which is beneficial to you, have the bureaus put it on.  Make sure to go through and mark when every account started and ended or if they are still open.  Removing bad credit can be done simply by making sure the credit bureaus have removed information that is over seven years old.  The Section 605 (C) (1) of the FCRA contains information on making sure charge-offs and late payments after seven years from the date of the account went bad by the date of the last activity,  judgments after seven years from the date the judgment was entered, and then bankruptcy after 10 years can be removed from your report. 

Note that on the date of last activity is seven years from when the debt first went bad – when you stopped paying the debt.  You must be constantly aware of this timeline.   It is not the date of last activity when turned over to the collection agency.  If the bureaus tell you that, it is wrong.  If one credit bureau removes outdate items, it does not mean that it comes off all three.  Each bureau works independently of each other.   You must say diligent and have all three pull the information off of your report.

4)  Finding and Disputing False Information 

A type of information you can dispute on your report is something that does not belong to you, but the report says it’s yours.  It’s incorrect.  It’s unbelievable how many people look at their credit report and find out it contains false or incorrect information.  People pull their reports and find that information is listed in their name, but does not contain their social security number (SSN).  You hear it everywhere about identify fraud and protecting private information in the news all the time from these types of SSN crimes.

When you believe there might be an entry on your credit report that is not yours, or that it has been reported falsely, meaning that, for example, you paid off your charge card, but they are still reporting it as money owing, you have the right to ask, in writing, that the credit bureau conduct an investigation.

In order for a credit bureau or a collection agency to conduct an investigation, they must spend time and money.  An investigation involves the bureau having to contact the lending institution, who will then have to pull their file and verify the information.  Usually, but not always, investigations don’t work out.  Be sure to send a letter of dispute in writing, not electrically, to each credit bureau stating the error is still there.  The reason why you send it in writing (via mail) is because you want the process for the collection agencies to the bureaus to take longer.  If the credit bureau goes over the 30 day investigation window, you get a pass (meaning it will be taken off you record).  For the credit bureau to get all the paperwork done on your file it can be a big task.  They can easily get confused on what each credit agency is doing regarding your account.  If an investigation happens on all three credit agencies, trust me you will have a hard time keeping track of just what is happening with your account.  When you send the letter to each of the bureaus, they have to verify your SSN, the credit grantor name and the amount owing on the debt.

Even if the account is not yours, I have learned collection agencies are really not concerned with where they collect their money as long as THEY get it.  If you find this happening to you and they refuse to remove false information from your file – you can contact the Federal Trade Commission (FTC) and ask they investigate the matter.  This website spot, is where it goes over this information and gives you a sample dispute letter.  Use the dispute letter on the FTC webpage and include the common lines I have listed below in the specific items to dispute where it applies.

If the account is yours, but the amount is incorrect or the date of last activity is incorrect, you can dispute the entry by entering a short statement on the dispute form of the credit report or you can write a letter, in your own handwriting, explaining your dispute.  Remember, the date of last activity is when the debt went bad – when you stopped paying on the debt.  From my experience I would handwrite the dispute because it makes it look like a professional is helping you.  Also, handwriting it makes it more personal.

If you request an investigation and are told that it will not be done, be informed that this is a violation of your rights under the FCRA.  Don’t be intimidated with any refusal of this process.  Exercise your rights and demand an investigation be done.  Here is the link on how to file a dispute online with the FTC.

When requesting the removal of false or incorrect information from your credit report the following statements are examples of what can be entered on the dispute portion of your credit report.  Use it with the dispute letter on the FTC page.

Duplicate reports
    -Please investigate these items, I never had accounts with this business, this information is incorrect.
Judgments from lawsuits or tax liens.
    
    -Please investigate this item, I was never involved in any lawsuit nor was a judgment ever rendered against me.  Remove this item from my report immediately.

Inquiry Items 
    These entries are usually located at the bottom of your report.  This is a list of credit grantors that have requested to see your credit report based upon your application to obtain credit with them, or in some cases applications for employment.  If you didn’t authorize an inquiry (which is a credit check), you must ask that it be removed.  Too many inquiries on a credit report are not favorable when you start building your credit.  

    -I never authorized this inquiry, please remove this from my report immediately and provide me with the name and address of the requesting party. 
    
    -This inquiry was not authorized by me and was made without my knowledge.  Please remove this immediately from my report.

Paid Account or Paid Collection 
    -Please investigate this information as this account was paid to the satisfaction of all parties.

Paid Collections 
    -This account has been satisfied.  Please investigate this matter, verify with the creditor and correct the information immediately.

Late Payments
    -I have always paid this account on time.  The information shown is incorrect, please investigate this matter and correct my credit report.

    -I have always paid this account on time. I had a dispute regarding the balance on my account and the creditor did not bill me in a timely manner.  The information is incorrect.   Please verify this with the creditor.

    -I have always paid this account on time.  I moved notifying all my creditors, but was not billed by this creditor.  I have spoken to the credit office and they assured me that I was current.  Please verify this with the creditor.

5)  Filing a statement of Explanation

You have the right to have on your file with the credit bureau an explanation of why your debt is reported unfavorably.  When you apply for credit – you have the right for your explanation to be included in your report and sent to any credit grantors.  When filing a statement of explanation you at least need to give a reason as to why you were unable to pay on time or why the debt went bad.

Review:

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