Credit reports are used when you apply for a loan, apply for insurance, and yes, even when you apply for employment. Thus, it is imperative that your credit report is accurate; any errors will hurt you.
Everyone is entitled to one free credit report each year from each of the three credit bureaus: Experian, Equifax, and Trans Union. This is NOT your score, but your report. It’s advisable to stagger them so you receive one every four months. When you receive them, check them for accuracy; you should dispute any errors.
Here are some things to keep in mind when disputing your credit report:
Read the Fine Print
If you received a report from one of the above three bureaus, read the terms at the bottom of their web page. Within 30 to 60 days of receiving the report, you have to send them an opt-out letter stating you won’t agree to binding arbitration.
Contact the Bureau
You may be tempted to contact the lender related to the disputed issue, but if you bypass the bureau’s dispute system, you may not be able to fight back if the lender doesn’t correct the mistake. So, contact the bureau first.
Snail-Mail Your Dispute and Keep All Documents
Consider sending a letter. There may not be enough room on the bureaus’ online form for a full explanation. Make sure your letter states:
- Why the information is inaccurate
- Evidence proving the error
Send all correspondence to the bureau (and a copy to the lender associated with the error) by certified mail, and keep the returned receipt. That shows that both parties received your dispute; otherwise, if your correspondence is lost or never received, you won’t have proof to show you sent it.
Make sure you save all denials of credit due to the error so you can prove you were harmed by the error.
The Statute of Limitations
Under the law any derogatory information should no longer be part of your credit report after seven years, with the exception of bankruptcy, which remains for 10 years.
What’s important to note is that often times debt is sold from one debt collector to another. When they sell the debt, they may not accurately state the timeline. If you speak to a debt collector (who has purchased your debt) and agree to pay part of what is legally an expired debt, you can restart the clock on debt that should no longer legally be part of your credit history. In this case, while the legal obligation may be dismissed, the moral obligation is another matter.
Make sure you dispute any errors on your credit report before the derogatory information hurts you.