How to Fix your Credit Report part two of our Repairing your credit guide
Whether you’re planning on fixing your own credit or would like a credit repair company to help you, one of the first steps in any repair process is to make sure your credit report is true and accurate. That’s because:
• 79% of all credit reports contain errors
• Even minor errors are enough to hurt your credit score
• It’s up to you to make sure your report is accurate
Many errors go unnoticed for years. Checking your credit report regularly is the best way to make sure you’re credit’s not suffering from inaccurate data. You can get a free copy of your credit report every 12 months by visiting http://www.annualcreditreport.com/.
Looking over your credit report
Your credit report contains a comprehensive listing of your most recent credit history. It will include everything from your active credit accounts, balances and payment history to any defaulted accounts, collections or court judgments.
It’s important to look over your report very carefully to make sure there’s no inaccurate, outdated or misleading information. Remember, mistakes are easy to miss so make sure you’re paying attention to detail.
Here’s where you’re likely to find the most damaging mistakes, so focus on:
• Personal Information—many people tend to glance over this section of the report because it seems irrelevant or unimportant. But in truth, ensuring an accurate personal info section is one of the best ways to avoid or detect the growing problem of identity theft.
It’s a common assumption that identity thieves will take out loans and credit cards in someone else’s name, max out the cards, stop paying the bills—and run your credit dead into the ground.
But a typical identity thief’s tracks may be a little harder to detect. They can take out a mortgage or rent an apartment, making sure to keep up the payments each and every month—and they can get away with it for years.
A good way to make sure this doesn’t happen, for example, is to look over the portion that lists your current and most recent addresses. If you spot an address you just don’t recognize, this is a big red flag.
• Credit History—this is where most mistakes are found over all. An error may be affecting your payment history, balances, credit limits, and so on. These kinds of mistakes can really bog down your score.
Review every trade line on your report. Make sure that:
• All listed accounts belong to you
• The status of each account is valid (paid, unpaid, defaulted, etc.)
• Your account balances and limits are correct
• All history of payment is up-to-date and accurate
• Nothing seems to be questionable or misleading
• Public Records—like the credit history section of your report, the public records portion may list errors that can be extremely damaging to your overall rating. Public records may include:
—bankruptcies
—foreclosures
—judgments
—property/tax liens
—failure to pay child support
In any section of your report, things may seem fine at a glance, but it’s up to you to dig a little deeper than the surface to make sure everything’s reporting true and correct.
The standard, when it comes to credit repair, is that if you identify anything on your report that seems to be inaccurate, misleading, incomplete, ambiguous or just plain suspicious—you have the right to dispute the item(s) and ask that it be corrected or removed from your report.
Dispute Letters
If you’ve been doing any research on credit repair, you probably keep hearing about dispute letters. If you find any mistakes (or anything you feel is questionable) on your report, you can make a dispute with the appropriate credit bureau, creditor or collection agency to have the item(s) in question corrected or removed.
A dispute letter is what’s used to start the process.
Dispute letters are pretty simple to write. They typically include the following:
• Your name, date of birth, social security number and address
• A brief explanation of the reason for the dispute
• The name of the creditor or collection agency reporting the information
• Any relevant account information such as the account number(s)
• Any supporting documentation you have, if any
Lastly—and perhaps most importantly—express exactly what you’d like to be done about it.
As in the above example, John Smith is disputing with his original creditor over a payment they claim he missed. John informed them that the payment was, in fact, made—and he sent a copy of the cleared check to prove it.
He finished the letter by telling them to please inform the credit bureau of the mistake, and to verify that the necessary correction was made. Chances are, John will have no trouble having that mistake fixed. As a result, he’ll probably see a quick rise in his score.
But who you send your dispute letter to makes a big difference…
Debt Verification vs. Debt Validation
If you’re planning on making a dispute, you have a few different options:
• You can dispute with the credit bureau
• You can dispute with the original creditor, or
• You can dispute with the collection agency
All dispute letters are written pretty much in the same way. But who you send the letter to is what really makes the difference.
Disputing with credit bureaus—disputing with a credit bureau means that you believe they’ve entered an error of some kind onto your report. Being so, your dispute letter will prompt them to verify their records. If, in fact, they find that there has been a mistake, they’re obligated to correct r or remove it from your report.
Disputing with credit bureaus is pretty straightforward and simple—and it works if they’ve made a mistake or simply can’t provide verification.
But what if the mistake isn’t the fault of the credit bureau but an error made by the original creditor or collection agency?
Disputing with original creditors and collection agencies—since the credit bureau’s information is only as accurate as the data given to them by the original creditors or collection agencies, if there’s a mistake beyond the scope of the credit bureau’s data, you’ll have to make your dispute on a bit of a higher level.
Disputing with original creditors and collection agencies is pretty much the same thing as disputing with credit bureaus—at least on your end. The difference is that creditors and collectors are required to perform a more thorough investigation into the disputed information.
They are often subject to providing original contracts, original bills and statements, and other documentation like payment records and so forth. Again, if they can’t provide sufficient proof, they must make sure the information is corrected or removed.
Credit Repair and Dispute Letters
In case you haven’t noticed, disputing is a big part of the credit repair process. In fact, most credit repair companies rely solely on dispute letters in order to make “improvements” to credit reports. These companies are sometimes known as dispute mills—and they could be dangerous.
What’s so dangerous about dispute mills?
There’s nothing wrong with disputing credit report information if you genuinely feel it’s inaccurate, outdated or misleading in some way.
In fact, that’s about the only way you can expect to have such errors fixed.
But dispute mills will challenge just about anything on a credit report, whether it’s a mistake or not. Not only is this dishonest, but it’s risky.
When Disputing Backfires…
You might remember an instance or two when a collection agency contacted you about an unpaid debt. Most of the time, correspondence with debt collectors is unpleasant to say the least, and it can seem to be an ongoing problem.
Eventually (and when it’s obvious you don’t intend to pay) the agency’s letters and phone calls will stop. And in many cases, they’re never heard from again.
At that point, could you think of any good reason to pick up the phone and remind them that you still owe?
Basically, that’s what you’re doing when you dispute a valid debt. Whereas the debt in question would have otherwise remained buried deep in their database, your dispute will certainly alert the creditor or collector to your unfinished business.
Not only could this start the harassment process over, but it could actually prompt them to take you to court and sue you. This is what we call waking the sleeping giant—and this is why disputing accurate items so dangerous.
If you’re planning on hiring a credit repair company for help, it’s highly recommended that you stay away from dispute mills. They can easily complicate the repair process, and can make your credit problems much, much worse.
…and after the Dispute Process
If the information you disputed turned out to be accurate, your credit report will go unchanged.
But if your dispute was a success, the agency in question should make the necessary adjustments and send you an updated copy of your credit report.
The next step in the repair process, then, is to address the remaining negative information on your report. There may be a variety of problems to address, but thankfully, there are many ways to resolve them.
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