What Can You Do If Your Credit Report Is Wrong?

Wednesday, March 26th

What Can You Do if Your Credit Report is Wrong?

According to a recent report issued by the Federal Trade Commission, 26 percent of all Americans have "potentially material" errors on their credit reports. The findings are alarming when one considers the fact that nowadays, a credit report affects everything from securing a good job to a low interest rate on a car loan.

Credit reports are compiled by the three major credit reporting agencies: Equifax, Experian and TransUnion. The three agencies use financial history on consumers to compile a report. The report contains every account ever held by the consumer, whether they paid on time or defaulted, as well as employment and residential histories.

The agencies then use the report to generate a credit score for each consumer. A credit score is a three-digit number that is generated using a mathematical algorithm which pulls data from a consumer's credit report. Credit scores range from 300 to 850 and are intended to predict the financial risk associated with granting credit to that particular consumer. Credit scores over 700 indicate the consumer is in good financial standing and a low-risk for failure to repay debt.

Consumers who generate scores in the 600-700 range generally have missed a few payments here or there, but are not consummate loan defaulters. While they are seen as a slightly higher risk category, they are not totally excluded by creditors. Individuals who have a score lower than 600 generally are considered high risk and may have difficulty securing loans and utility services.

Because a good credit report affects so many aspects of a person's life, it is best to check it regularly to ensure there are no mistakes which could affect your ability to secure loans and services.

The information revealed by the FTC's report is alarming in that 10 million Americans likely are paying more in interest on credit cards and loans due to faulty reporting. This is why it is vital that all consumers check their credit reports at least once a year.

So what do you do if you review your credit report and discover errors?

The first step to take is to file a formal dispute with the credit reporting agency which included the error on your report. Each agency provides information on how to dispute information at the time it issues a report to the consumer. Reports can be filed via regular U.S. Mail or through an online form on each of the credit reporting agencies' websites.

Once a dispute is filed, the credit reporting agency investigates by contacting the creditor which provided the information. The creditor then reviews their records to determine if they made a mistake in their original reporting to the credit reporting agency. Once their investigation is complete, they report their findings back to the credit reporting agency. The consumer then is notified if their dispute has been validated and resolved, or if the creditor has determined their original information is correct and refuses to alter it.

In the event a creditor refuses to change information which the consumer believes to be false, re-disputes can be filed; however, unless the consumer provides supporting information to validate their claim and prove the information was incorrect, the same outcome is likely. Truly disgruntled consumers who feel they aren't getting anywhere with a creditor or the credit reporting agencies have the option of filing a complaint under the guidelines of the Fair Credit Reporting Act, which is administered by the FTC.

If all this sounds like a long and manual process, there are companies who will clear up your credit report for you. TopConsumerReviews.com has reviewed and ranked the best credit repair services available today.