Your credit score is one of the most critical aspects of your life. A good credit score can open up opportunities to buy a home, start a business, and provide financial stability for your family. On the other hand, a bad score can keep you from getting a car, renting an apartment, or even getting a job.
For many people, errors in their credit reports have had a significant impact on their credit score. In fact, a 2012 study by the Federal Trade Commission found that one in four consumers found errors that could impact their credit score. These errors can be as simple as misspelled information, or as complex as incorrectly reported account information. No matter the nature of the error, it is important to ensure everything on your report is correct to avoid these negative hits to your credit.
Similarly, you can raise your credit score by disputing errors. Of all the difficult, complex, and time-consuming efforts you may undertake to improve your credit, this should be the simplest and most immediately effective.
Common Credit Report Errors.
A few of the most common errors consumers find on their credit reports include:
- Misspelled name
- Incorrect address or phone number
- Outdated information
- Wrongly reported delinquency
- A closed account reported as still open
- Account balance errors
- Incorrect credit limit information
- Another person’s information merged with your report
- Remedied collection accounts still appearing
- Reinsertion of incorrect information after correction
While these are far from the only errors that can impact your score, these items and others like them are a few things to be on the lookout for when inspecting your report.
What to Do With an Error.
If you have found an error, it is important to take action immediately. The longer any incorrect information remains on your credit report, the more likely it is to have a negative impact. There are a few ways to dispute errors on your credit report, each with its own individual pros and cons. If done successfully, you can raise your credit score by disputing errors on your credit report.
If the error is something simple, such as a misspelled name or incorrect phone number, it can be corrected with an online dispute. All of the major credit bureaus provide an online dispute option on their websites.
The online method is quick, convenient, and straightforward. The website will allow you to select the incorrect information, choose a reason why you are disputing it, and attach any supporting evidence. You can then follow up on the status of the dispute after you have completed it.
While this provides some clear advantages, the “cookie-cutter” nature of the online dispute forms may not allow you to explain the specific nature of your unique situation.
Writing a Letter.
The more traditional dispute method of writing a letter directly to the credit bureau may take longer, but it will allow you the freedom to explain your situation as specifically as necessary, in your own words. You can find dispute letter templates online, which can provide a good starting point.
You would want to include copies of any supporting evidence (receipts, canceled checks, letters, etc.) along with the letter. In many cases, it can be helpful to write directly to the agency that reported the incorrect information as well.
Credit Repair Software.
If you have discovered multiple errors or if you plan to take additional steps to improve your credit, credit repair software, such as that found on DisputeBee.com, combines the best of both worlds for error disputing. This software provides the convenience of the online forms, as well as the customization capability of a letter.
Whichever method you choose, it is important to be patient after you submit your dispute. While dispute investigations generally take less than 30 days, it can take months before the errors are completely resolved.
Once the process has been completed, you could raise your credit score, and as long as you remain vigilant about ensuring the information on your report is correct, you will avoid unnecessary impacts on your credit in the future.