Anyone who has a credit card or has applied for a loan has a credit report, and if you’ve ever failed to make a timely payment, defaulted on a lease, had a lawsuit filed against you, or any other negative financial history, it could be noted on this credit report. Even if your financial history is stellar, errors could be giving you a bad name with banks, credit card companies, potential employers, or landlords. The good news is you can take steps to fix this.
A credit report is free if you’ve been a victim of fraud or been denied credit in the last 60 days. Otherwise, for about $9, you can get a copy of your report from each of the big three credit-rating firms: Experian (1-888-397-3742; www.experian.com); Equifax (800-685-1111; www.equifax.com); and Trans Union (800-888-4213; www.transunion.com). Each agency acts independently, so check your report with each company to get a full credit history.
Each report includes personal information, payment status of open accounts, public information such as lawsuits, bankruptcies, liens, and court judgments, and inquiries from those who have requested your report within the last 12 months. As you review, highlight information that is erroneous, outdated, or irrelevant. Take note of late payments as well as more serious problems that might warrant explanation.
If a creditor is reporting inaccurate information, file a dispute with the reporting agencies. They will investigate, and if the creditor cant prove its case, the mistakes will be erased. Avoid credit repair solicitations or free credit services because they often charge you for filing the same disputes and explanations that you can submit for free.
Your reports may contain some accurate information that leaves out some vital piece of information favorable to you for instance, maybe you missed two credit card payments when your mail got lost during a move. The Fair Credit Reporting Act allows you to write a 100-word explanation to give your side of a creditors negative remark. Send your notification to the credit bureau via certified mail. If there is no response in 30 days, send a second letter, then a third. If this doesn’t work, appeal to the creditor involved to correct the error.
Check your credit report at least six weeks before applying for a car loan, lease, mortgage, or job (some employers will check) to allow time to dispute or correct any reported inaccuracies.