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How To Fix Errors On Your Credit Report

July 20, 2008

by Brandon Cornett

Errors within your credit reports can negatively affect your credit score, making it lower than it really should be.

In turn, this makes it harder to qualify for a home loan, a car loan, or obtain any form of financial lending for that matter. And if you do qualify for financing, you will almost certainly pay a higher interest rate because of that score. So errors on those reports must be identified and correcting, no matter how long it takes you.

Before we go any further, I want to point out an important distinction. In this article, I am not offering tips on how to improve a credit score (one that is low because of bad financial habits on the part of the consumer). Instead, I’m focusing on plain old mistakes on your reports, such as a line of credit that should not be there, or a documented bankruptcy that never happened, etc.

In other words, I’m telling you how to fix things that aren’t your fault. So with that clear, let’s press on!

The “How” of Correcting Errors

The first thing you need to understand is that you have three different reports, and they contain exclusive / proprietary data as opposed to “shared” data. This means that you could actually see different information on all three of them.

It also means that you could encounter a mistake on one particular report (the one from TransUnion, for example), while the data provided by Equifax and Experian appeared to be correct. So if you ever have to dispute a mistake on your information, you must contact the company that produced the erroneous report, as the information provided is specific to that company.

All three of the companies mentioned above have a “Disputes” section of their website. That’s where you need to go in order to get the ball rolling. Filling out a dispute form is a way of saying, “Hey, this information is incorrect, and you need to fix it because it’s affecting my financial status!”

So, you found an error on one or more of your credit reports and you have diligently submitted a dispute / correction form through the appropriate website above. That’s all there is to it, right?

Unfortunately, no…

You Are Not a Preferred Customer

Here’s something else you should take away from this article. When you first begin contacting a credit-reporting company about a mistake within your information, you will quickly realize that you are not their customer. You will realize this because they will probably treat you in a fashion that suggests the same.

The mortgage company who pays to obtain your credit information is their customer. The car dealer who pays for this information is also their customer too. But you are not their customer. You are a number … a piece of data to them. And when you start demanding their review of a potential mistake, you become a nuisance as well.

Is this right and fair? Of course not. Personally, I don’t think a private company should even be able to collect such information. And if they do collect such information, they should be proactive about safeguarding the data and ensuring the correctness of it. But this is not the case.

I just want you to understand the reality of the situation before you become involved with it. When you go into the process understanding the dynamic, you’ll be better prepared for what you must do next, which is to stay on top of them until things are sorted out!

Weak Legislation to the Rescue

As you have probably guessed, the three credit-reporting agencies are regulated by Congress. However, “regulation” in this context just means there are some rules on paper — it doesn’t mean those rules are actually enforced. Specifically, the Fair Credit Reporting Act dictates certain obligations these companies have, with regard to maintaining credit information on consumers. (and correcting that information when it is clearly in error).

The law was created back in 1970, and it has been more recently amended (2003) to try and force the credit-reporting companies to be more responsive. Still, many consumer advocates argue that the act does not go far enough to protect consumers, that it is lazily enforced, and that the core problems that prompted the creation of the act are still very much around today.

The credit-reporting companies are not governmental organizations, as many consumers believe. They are companies driven by profit. In other words, it’s in their interest to make as money as possible (as with any other company), but it’s not necessarily in their interest to look after consumers.

As a last resort — if you’re previous efforts to correct reporting errors have proven unsuccessful — you can sue the company who has produced the erroneous information. If you can prove that certain information is false, and that the report has thus caused you financial harm, you could be entitled to damages (monies) paid by the company.

About the Author: Brandon Cornett publishes the Home Buying Institute, a website full of advice on mortgages loans, house hunting, credit scores and more. Learn more or contact the author by visiting www.homebuyinginstitute.com

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