With a careful approach, it is possible to have a clear credit history with a bit of effort and persistence. By educating yourself about the rules of credit reporting, you can make the credit reporting agencies work to your advantage.
Consumers are entitled to one free credit report every year. However, if you find that you have been turned down for credit due to a poor credit report or detrimental information on a credit report, you are automatically entitled to a free credit report within 90 days of receiving a denial letter.
Once you receive your credit report, it is your opportunity to review all of the information contained in your report. Many consumers are surprised to find that there are many errors on most credit reports. In fact, according to a 2004 study, approximately 25 percent of credit reports contain errors. And these errors can prove to be extremely detrimental to many consumers and result in being denied credit, being charged higher insurance rates or even being denied employment for jobs for which they are well qualified.
Challenging Credit Reports
If you discover errors on your credit report, it is your responsibility to challenge those errors. Once you have contacted a credit reporting agency, they are required to conduct an investigation within 30 days and if there is no response, then the credit reporting agency is required to remove the error.
In order to remove errors from your credit report there are several steps you need to take.
Order a copy of your credit report from all of the agencies – Experian, TransUnion and Equifax. There are services that offer a 3-in-1 report,
although usually these services charge for their reports. You are legally entitled to at least one free report every year. Contact each credit reporting agency separately for your free report.
Once you receive your report, carefully review it, looking for errors and incorrect information. Very often, there will be information from other people or for accounts you never even had in your name. Additionally, you may discover that accounts you had closed are still being reported as open and addresses you where you never lived are reported under your name.
Carefully note the errors by highlighting the incorrect information on the report, making notes about the nature of the error – incorrect address, invalid account, etc.
Write a separate letter to the reporting credit agency for each error. In the letter, include your contact information, your social security number and the specific information that is incorrect.
Wait the required 30 days and if the credit reporting agency conducted an investigation the resulted in a change on your credit report, then you should receive a new copy of your credit report automatically from the reporting agency. If, however, there was no change, then you may need to write another letter challenging the error again.
Errors in credit reports are rampant and it is up to the consumer to carefully monitor their own credit report to make sure that their report remains error-free. If you discover errors on your credit report, write a letter to the credit reporting agency and outline the error. It is important to be persistent and eventually you will find that your credit report is soon clear.