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Here’s a statistic you probably don’t want to hear: More than 70 percent of credit reports contain mistakes. These mistakes can range from misspelling of your name to accounts you never opened. While it maybe tempting to ignore small errors such as inaccurate spellings or addresses, don’t. Even these make you more vulnerable to fraud if someone is using a misspelled version of your name or a former address where you never lived. The bottomline: Whatever is wrong on your credit report must be corrected.
This first step to identifying and correcting mistakes is to get a copy of your credit report from the three major credit bureaus. Go to annualcreditreport.com to access your credit reports. This is a free service provided under the Fair Credit Reporting Act (FCRA). This Web site links you directly to your credit reports with each of the three major credit bureaus: Equifax, Experian and TransUnion.
Because there are three agencies to contact and each is required to provide a report once a year, many people like to request one report every four months. For example, request an Equifax report in October, Experian in February and TransUnion in June. Frankly, it can be a little overwhelming dealing with errors on three credit reports at the same time. By breaking them up into smaller chunks, it can make managing your credit more pleasant.
Keep in mind that it can sometimes be difficult to access your credit files through the credit bureau’s online systems if you forgot, or don’t know, the answers to security questions. Don’t be dissuaded. If you can’t do it online, simply print the mail-in request form for the credit reporting agencies and send them off with a copy of required ID. You should receive your free credit reports within two weeks. Mail and telephone contact information for all three agencies is available on the home page of annualcreditreport.com.
If you order a free credit report every four months, it is wise to begin with Equifax. While all three of the credit bureaus provide different credit scores, neither Experian nor TransUnion sell FICO scores directly to consumers. But when you order your annual free credit report from Equifax, they will offer you a one-time FICO credit score for $7.95. Receiving your FICO score from Equifax will give you an idea of the range your credit ratings fall into. As you repair any mistakes and work on your credit during the year ahead, it is likely your FICO score will increase.
When you receive your first credit report, don’t be surprised by what you discover. As I’ve said, most contain mistakes. It is helpful to photocopy each report for mark-up so you have a clean original for your file. An easy-to-read original makes it much easier to check corrections later.
Using a copy of your credit report and a highlighter, start at the beginning of the report. Carefully read every line, searching for anything that is not correct. Highlight all mistakes. Stay calm if you encounter numerous errors. Try to look at the positive side: You’re dealing with it and eventually it will get better.
Any negative information, except judgments and bankruptcies, must be removed from your credit reports after seven years. If you find anything negative from seven years ago, or older, highlight it as a mistake.
In your credit reports, you will find a page that lists every creditor and provides their contact information. If you find open accounts that are not yours, you want to call the creditors and ask for the mailing address on the account. Write down the address for each account. You may have an identity theft issue, which I’ll cover in detail in future columns. Armed with account information and the billing address, immediately phone all three credit bureaus and your local police department. Tell them you are a victim of identity theft.
To correct other report mistakes, first go to annualcreditreport.com and click on the credit bureau Web site – either Equifax, Experian or TransUnion – for the credit report you are working on. Print correction forms. List all our corrections on the form. Add as many pages as you require. Number the pages and be sure your name is on each page. Explain each error in detail and staple your marked up credit report to the correction forms.
Ask the credit bureaus to send you a corrected copy of your credit report after the mistakes have been removed. Mail your changes with a signature-required return-receipt request so you have proof your corrections have been received. Keep a copy of everything you send and keep the return-receipt request.
The credit reporting agencies are required to handle your corrections within a month. If any error is not handled within a month, the information must be removed from your credit report. This is why you need a return receipt proving the date your information arrived at the credit reporting agencies. Sending letters and calling on the phone will probably produce the best results.
Final note: When you visit the credit bureau Web sites, don’t accept any services that Equifax, Experian or TransUnion try to sell you. You don’t want credit monitoring or any service that allows a third party to frequently check your credit. Only Equifax’s FICO score offering is worth buying.
As we confront so many changes in credit scoring, credit qualifying and credit building, we must take action to create the best credit history we can.