Correcting Credit Report Mistakes

H. L. Mencken once said that for every problem, there is a solution that is simple, neat, and wrong.

Some might say that's a good description of the credit reporting industry, where mistakes, unfortunately, are as common as flies at a July 4th picnic. When errors are made on your credit report, you and you alone suffer the consequences.

That's why knowing your credit score and knowing what's on your credit report are two big first steps in smart debt management.

Why? Because knowing your credit value and knowing what information is included on your credit report eliminates any nasty surprises that might be in store for you. For example, you're at Macy's or Sears and you can't wait to open up your new charge card. But when the clerk comes back, with what you swear is a smirk on her face, you know right away that you're application for credit has been rejected. Nine times out of ten that means you weren't aware of your credit score or weren't aware of what was on your credit report.

In other words, you didn't have control over your debt management situation (of course, opening a department store charge card is another example of that).

Okay, so what happens if that situation does come to pass and you get rejected for credit? And you swear that you've paid your bills and you swear that your credit is clean?

Could be that there is a mistake on your credit report - and you need to fix it. If you don't, the error stays on your credit report for seven years, for all to see. You don't want that to happen.

Unfortunately, many Americans let that happen. According to Consumer Reports magazine, 48% of Americans have mistakes on their credit reports, with 12% of those mistakes severe enough to restrict those consumers from getting credit.

Consequently, it's always best to check your credit report before you apply for a big loan or buy something on credit. That way you can correct any mistakes you find on your report before a lender or creditor notices.

In most cases, credit errors are caused by that most banal of reasons - your name. The more common it is, the higher the chance that you may share someone else's financial faux pas - someone with the same name as you. Maybe that person dies; maybe that person stopped paying off their student loans, and maybe that person's name wound up on your credit report through a transcription error. Most often, the name thing will manifest itself on your credit report as an account that doesn't belong to you.

To fix credit errors like that, make sure to check out all three credit-reporting agencies. Do so at least once annually. One report agency may have different information than another so you have to cover all your bases. A new law also allows US consumers free access to one credit report annually. Take full advantage of that.

Here is the skinny. The Fair Credit Reporting Act (FCRA) requires each of the nationwide consumer reporting companies -- Equifax, Experian, and TransUnion -- to provide you with a free copy of your credit report, at your request, once every 12 months. The FCRA promotes the accuracy and privacy of information in the files of the nation's consumer reporting companies.

When you identify an error, get cracking. By law, credit agencies are required to fix any errors. But don't hold your breath - they don't always move as fast as you'd like. Or as fast as you need if you have a big mortgage loan waiting.

To get things going, file a dispute with the agency. You can e-mail, or even place a phone call (if you go that route make sure you jot down the name and title of the person you speak to).

Any written correspondence should include the following pieces of information:

• Your name, address, date of birth and social security number.
• The name of the company you have a dispute with and any relevant account numbers.
• The reason for your dispute, any corrections to your personal information and a request for correction.

Make sure that you collect all of the necessary paperwork you need to document your side of the story before you contact the credit agency. Assume nothing and be prepared for anything and any question. Make no mistake - the credit bureau will want solid proof that they have made a mistake.

If you can't get a credit bureau to correct a mistake, you can get them to at least print your side of the story on a given dispute and include it on your credit report.

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