How do I correct errors on my report?

Few aspects of both consumer and real estate financing have come under as much written and verbal gunfire as has the credit reporting industry. The skyrocketing volume of credit transactions has put a tremendous strain on credit reporting agencies which deal with millions of requests for information daily.As a result, a recent report to the U.S. Congress stated that as many as 40% of individual credit histories contain errors of some kind. A single missed keystroke by a data entry clerk, for example, can assign a delinquent account to the wrong file. Corrective information submitted by an individual can be misrouted or entered erroneously.

Our economy could not function without credit reporting. We need it to make purchases both large and small, to enable retailers to accept our checks, to obtain loans for homes, cars or college education. It is necessary for corporations to manage their cash flow for the overall benefit of the economy, and for us as individuals to manage our own finances.

For all these reasons, we must be vigilant about the accuracy of our credit reports. We need to know what goes into them, how to read them, how they are used and how to challenge errors when they occur.

While credit might have once been a private matter between oneself and one’s banker, this is no longer the case. Every purchase we make on credit creates a record somewhere and these records flow into the huge databases from which our credit histories are constructed. Those histories, in turn, are used by nearly all credit grantors to determine how reliable we are in the use of credit, and to decide whether or not to extend it to us.

One way to fix an error is to contact the creditor reporting it. If you can get the creditor to agree that what was reported is an error, have them give you that information in writing, plus agree to report the updated information to the bureaus.

The Fair Credit Reporting Act gives you the right to dispute both the accuracy and completeness of your credit history. Any of the three credit reporting agencies must respond to your dispute. They must reinvestigate and record the results of their investigation “within a reasonable period of time.” While this period remains undefined, practice indicates it means thirty days. If you don’t get results within thirty days, have your attorney send the bureau a letter, together with copies of your correspondence.

If the reporting agency cannot verify a disputed entry, it must delete it. If the information is incomplete, they must complete it. For example, if you were temporarily delinquent on an account, and then brought it current and the agency’s report does not reflect that, they must correct your record. Also, should your file show someone else’s account (this sometimes happens with “junior-senior” relationships or with common names) the agency must delete it.
At your request (be sure you do request it) the agency involved must send a notice of correction to anyone who has received your credit report within the last six months.

In the event that some unforeseen misfortune resulted in a cluster of late payments in your record, you may send a short statement about the circumstances to each of the agencies. You may wish to report illness, unexpected unemployment, the death of a spouse, military call-up, or unexpected medical expenses. Be brief and to the point. No whining. This statement will be added to your file and will be disclosed whenever your credit file is accessed.

Repairing Your Credit

You see the advertisements in newspapers, on TV, and on the Internet. You hear them on the radio. You get fliers in the mail. You may even get calls from telemarketers offering credit repair services. They all make the same claims:

  • “Credit problems? No problem!”
  • “We can erase your bad credit — 100% guaranteed.”
  • “Create a new credit identity legally.”
  • “We can remove bankruptcies, judgments, liens, and bad loans from your credit file forever!”

Do yourself a favor and save some money, too. Don’t believe these statements. Only time, effort, and a personal debt repayment plan will improve your credit report.

This document explains how you can improve your credit-worthiness and lists legitimate resources for low- or no-cost help.

The Scam

Everyday, companies nationwide appeal to consumers with poor credit histories. They promise, for a fee, to clean up your credit report so you can get a car loan, a home mortgage, insurance, or even a job. The truth is, they can’t deliver. After you pay them hundreds or thousands of dollars in up-front fees, these companies do nothing to improve your credit report; many simply vanish with your money.

The Warning Signs

If you decide to respond to a credit repair offer, beware of companies that:

  • Want you to pay for credit repair services before any services are provided
  • Do not tell you your legal rights and what you can do yourself for free
  • Recommend that you not contact a credit bureau directly
  • Suggest that you try to invent a “new” credit report by applying for an Employer Identification Number to use instead of your Social Security Number
  • Advise you to dispute all information in your credit report or take any action that seems illegal, such as creating a new credit identity. If you follow illegal advice and commit fraud, you may be subject to prosecution

If you provide false information while using the mail or telephone to apply for credit, you could be charged and prosecuted for mail or wire fraud. It’s a federal crime to make false statements on a loan or credit application, misrepresent your Social Security Number, or obtain an Employer Identification Number from the Internal Revenue Service under false pretenses.

Under the Credit Repair Organizations Act, credit repair companies cannot require you to pay until they have completed the promised services.

The Truth

No one can legally remove accurate and timely negative information from a credit report. If you wish to dispute information contained in your credit report, the law allows you to request a reinvestigation of the information in question. There is no charge for this. Everything a credit repair clinic can do for you legally, you can do for yourself at little or no cost. According to the Fair Credit Reporting Act:

You are entitled to a free copy of your credit report if you’ve been denied credit, insurance or employment within the last 60 days. If your application for credit, insurance, or employment is denied because of information supplied by a credit bureau, the company you applied to must provide you with that credit bureau’s name, address, and telephone number.

You can dispute mistakes or outdated items for free. Ask the credit reporting agency for a dispute form or submit your dispute in writing, along with any supporting documentation. Do not send them original documents.

Clearly identify each item in your report that you dispute, explain why you dispute the information, and request a reinvestigation. If the new investigation reveals an error, you may ask that a corrected version of the report be sent to anyone who received your report within the past six months. Job applicants can have corrected reports sent to anyone who received a report for employment purposes during the past two years.

When the re-investigation is complete, the credit bureau must give you the written results and a free copy of your report if the dispute results in a change. If an item is changed or removed, the credit bureau cannot put the disputed information back in your file unless the information provider verifies its accuracy and completeness, and the credit bureau gives you a written notice that includes the name, address, and phone number of the provider.

You also should tell the creditor or other information provider in writing that you dispute an item. Many providers specify an address for disputes. If the provider then reports the item to any credit bureau, it must include a notice of your dispute. In addition, if you are correct, that is, if the information is inaccurate, the information provider may not use it again.

If the reinvestigation does not resolve your dispute, have the credit bureau include your version of the dispute in your file and in future reports. Remember, there is no charge for a reinvestigation.

Reporting Negative Information

Accurate negative information generally can be reported for seven years, but there are exceptions:

  • Bankruptcy information can be reported for 10 years
  • Information reported because of an application for a job with a salary of more than $75,000 has no time limitation
  • Information reported because of an application for more than $150,000 worth of credit or life insurance has no time limitation
  • Information concerning a lawsuit or a judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer
  • Default information concerning U.S. Government insured or guaranteed student loans can be reported for seven years after certain guarantor actions

>The Credit Repair Organizations Act

By law, credit repair organizations must give you a copy of the “Consumer Credit File Rights Under State and Federal Law” before you sign a contract. They also must give you a written contract that spells out your rights and obligations. Read these documents before signing the contract. The law contains specific protections for you. For example, a credit repair company cannot:

  • make false claims about their services
  • charge you until they have completed the promised services
  • perform any services until they have your signature on a written contract and have completed a three-day waiting period. During this time, you can cancel the contract without paying any fees

Your contract must specify:

  • the payment terms for services, including their total cost
  • a detailed description of the services to be performed
  • how long it will take to achieve the results
  • any guarantees they offer
  • the company’s name and business address>

Have You Been Victimized?

Many states have laws strictly regulating credit repair companies. States may be helpful if you’ve lost money to credit repair scams.

If you’ve had a problem with a credit repair company, don’t be embarrassed to report them. While you may fear that contacting the government will only make your problems worse, that’s not true. Laws are in place to protect you. Contact your local consumer affairs office or your state attorney general (AG). Many AGs have toll-free consumer hotlines. Check with your local directory assistance.

For More Information

You can file a complaint with the FTC by contacting the Consumer Response Center by phone: toll-free 1-877-FTC-HELP (382-4357); TDD: 202-326-2502; by mail: Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Ave, NW, Washington, DC 20580; or through the Internet, using the online complaint form. Although the Commission cannot resolve individual problems for consumers, it can act against a company if it sees a pattern of possible law violations.

This document was written in February 1998 by the FTC.