Last week a report was released by the Federal Trade Commission that stated that 1 in 5 credit reports contained errors and that these errors are likely resulting in higher credit card interest rates, auto loan payments, insurance policy premiums and other financial obligations.
Credit report errors can have a devastating effect on your financial outlook. But now that you know this happens, what can you do to fix it?
First, get a copy of your credit report. Under the Fair Credit Reporting Act, you are entitled to a free copy of your credit report every year. Be sure to get it and review it to be sure everything is accurate. Consumers should then do everything they can with the bureau that is showing the errors and also petition the Consumer Financial Protection Bureau.
The Fair Credit Reporting Act requires that the credit reporting agencies conduct a reasonable investigation whenever a consumer disputes information on their credit report.
Construct a dispute letter yourself. Do not dispute the error online. Make sure you explain any part of your case that is complicated or confusing. Be aware that many online dispute forms contain arbitration clauses which can reduce your consumer rights.
Be sure to include any and all evidence. Attach every bit of detail or evidence available to you and be sure to make copies of all your correspondence.
You may have to follow up with the credit bureau to insure that your dispute was received and that they are working on it. If the mistake is confirmed, the credit reporting agency has 30 days to correct it and if they do not, then you can file a complaint with the Federal Trade Commission.
Note that the right only applies to inaccurate information. The agency does not have to do anything if you give a reason for not paying a debt, but do not challenge the accuracy of the information about the debt. Also, you will have to check and dispute inaccurate information with all three credit reporting agencies.
As I stated, in my article “Why Your Credit Report Is More Important Than Ever” the credit report has become even more important (hence the timing of the FTC’s report). And as important as this document is, errors on credit reports are not uncommon, despite their potentially huge consequences.
Disputing credit report errors can be complicated and slow, but it is also a necessary task for those who want to avoid paying more on loans and credit cards for a mistake they did not make.
Black Enterprise Columnist Jennifer Streaks is a Financial Expert, Author & Pundit. Continue the conversation by going to her website www.JenniferStreaks.com and by following her on twitter @jstreaks.