Your credit report represents a compilation of information about your finances. It contains personal data, such as your date of birth, social security number, past and current addresses. The report tracks mortgages, credit cards, current and past loans and other financial data.
Your credit report discloses details about whether the accounts are up-to-date, delinquent, paid in full, collections, or charged off by the lender. When you apply for a car loan, home mortgage, and other types of credit, the creditor orders the report and examines your credit history.
Errors or inaccuracies on your credit report affect your credit score. A lower credit score can cause a lender to charge you a higher interest rate or deny you credit altogether.
Credit reporting regulations
Prior to apply for credit, you should make sure the information in your credit profile is complete , up-to-date, and error-free before you apply for a loan for a car, home mortgage insurance or even a job.
The Fair Credit Reporting Act (FCRA) covers the requirement credit reporting agencies must follow to ensure the accuracy of the information contained in their databases and the privacy of consumer data.
The FCRA also requires the credit bureaus main credit bureaus (Experian, Equifax, and TransUnion) to provide you with a free copy of your credit report every 12 months upon your request. Do not contact the credit reporting companies directly for a copy of your credit report.
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Examine the reports
After you receive your credit report from one or all three agencies, examines the reports carefully. As you examine the credit report, keep in mind the FCRA requires credit reporting agencies remove most negative credit items after seven years. The information you check for errors include:
- Personal information – Make sure the name is accurate—this includes suffix like Jr. or Sr. Verify the social security number, date of birth and addresses where you live past and present.
- Account numbers – Verify the accuracy of the account numbers and that you have done business with the companies listed. This means that the right account is attached to the right name. Make sure the accounts show you payment as current and accurate.
- Negative activity – Check the correctness of negative account activity and request for it to be verified. This includes late payments, missed payments and incorrect public record activity—liens, bankruptcy, court judgment, or foreclosure. Remove inaccurate or unverifiable records from your files.
Rules do not prevent credit bureaus from removing negative information anytime it has a legitimate reason.
Dispute the information
Inform the credit reporting company, in writing, the error or inaccuracy you want corrected. List each item you dispute and that you want it removed or corrected. Send the letter to the credit bureau by certified mail with a return receipt. Keep copies of the letters and enclosures in your files.
The credit reporting agency has 30 days to investigate the disputes. The process entails the credit reporting company sending the information provider the data you provide regarding the error disputed information. The company reviews its data regarding the account and reports back to the credit reporting firm.
After the credit reporting agency completes its investigation, the firm sends you a letter informing notifying you of its findings and if it made corrections to your credit report.