Mistake #1: Hiring A Shady Credit Repair Company
Some people donât feel they have the time or expertise to do their own credit repair. For those people, hiring a credit repair company can be beneficial and convenient although the convenience comes at a price. According to Credit Karma, the cost of professional credit repair services could include a flat fee or âper deletionâ charge of $35 or more. The total cost could go up to $750 or more. Some companies charge a monthly fee ranging from $50 to $130 or more. Only you can decide if the cost of paying someone else to repair your credit is worth it. Itâs worth noting that credit repair companies, in general, donât have a great reputation, so review your rights above and as spelled out in the CROA.
Notify Original Information Furnishers
Although its not absolutely necessary, consider contacting the original information furnisher. They supplied the information about the disputed item on the credit report. During the investigation process, creditors also have to confirm the accuracy of the entry after bureaus contact them.
If the information furnisher can begin their investigation sooner, it may increase the chances of having the negative item removed. Talk to the customer representatives first. If they ask for a formal letter, consider using the following Sample letter provided by the FTC.
If there are errors in collections accounts, consider disputing collections by writing a debt validation letter to the debt collectors.
Wait Up To 45 Days For The Credit Bureau Or Furnisher To Investigate And Respond
The credit bureau generally has 30 days after receiving your dispute to investigate and verify information with the furnisher. The credit bureau must also report the results back to you within five days of completing its investigation.
If you dispute the error with the information furnisher, that company must also report the results of its investigation to you. It also typically has 30 days to investigate. But if the furnisher stands by the accuracy of the information it reported, it wont update or remove the error.
One more thing to note is that either the credit bureau or the furnisher may decide that your dispute is frivolous. This generally happens when youve submitted incorrect or incomplete information on the dispute, but can also occur if youve tried to contest the same item multiple times without any new information or if youve attempted to claim that everything on your credit report is incorrect without proof.
If the bureau decides that your dispute is frivolous, it doesnt need to investigate it further as long as it communicates that to you within five days, along with the reasoning for deeming the dispute frivolous. If your original dispute was labeled frivolous, you can try to resubmit a dispute with updated materials.
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How To Spot Credit Report Errors
Now that you have obtained your credit report from the three major credit reporting agencies, Equifax, Experian, and Transunion, itâs time to look for common mistakes and errors. First, look for any inaccurate information such as your name misspelled, wrong address or date of birth. Sometimes information is mixed up with people such as parents or siblings with similar names.
Review each account listed on your credit report. All debt, whether secured or unsecured, will be listed, as well as any lawsuits and outstanding judgments. Look for accounts that may not belong to you or on-time payments that are reported as late payments. Review the account status such as open, closed, or charged-off. Make sure any past judgments that you are making payments on or settled accounts are reported correctly.
Which Credit Report Errors Should You Dispute
The most concerning errors are those that could hurt your scores or suggest identity theft. Those include:
Wrong account status .
Negative information that’s too old to be reported; most derogatory marks on your credit must be removed after seven years.
An ex-spouse incorrectly listed on a loan or credit card.
Wrong account numbers or accounts that arent yours.
Inaccurate credit limits or loan balances.
Accounts you don’t recognize.
If you suspect your identity has been stolen, follow the steps to report identity theft.
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What Happens After You Dispute Information On Your Credit Report
If you suspect that the error on your report is a result of identity theft, visit IdentityTheft.gov, the federal governments one-stop resource to help you report and recover from identity theft.
If the furnisher corrects your information after your dispute, it must notify all of the credit reporting companies it sent the inaccurate information to, so they can update their reports with the correct information.
If the furnisher determines that the information is accurate and does not update or remove the information, you can request the credit reporting company to include a statement explaining the dispute in your credit file. This statement will be included in future reports and provided to whoever requests your credit report.
# : Go Through Your Credit Report
Note that a credit report is not just a simple report containing only your credit score. It will also contain your payment history, credit utilization, type of credit use, credit inquiries, and the length of your credit history. Have a look at these factors in detail to get a thorough understanding of why your score is low.
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Documentation To Provide For Your Dispute
In addition to the above, you’ll need to provide:
Proof of identity
Your Social Security number and date of birth
A copy of government-issued identification
Your current address and past addresses;going back two years
A copy of a utility bill or bank or insurance statement that includes your name and address
Avoid Credit Repair Services
Also, be wary of companies that offer to remove negative information from your credit report for a fee. Negative information stays on your record for a certain period of time, and paying a fee will not remove the negative information early. Errors can be fixed if you follow the above process.
You should also carefully read the fine print on any company or loan product that offers a;quick fix credit repair. Many of these;programs or credit repair loans do not work as advertised, and you can easily repair your credit on your own without these services at a much lower cost to you.
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How Often Should I Check My Credit Reports
Normally, experts advise checking your report at least once or twice a year as a good practice. Thats how often the three credit bureaus typically offer free reports. Checking your own credit is considered a soft inquiry, which means it will not hurt your credit score.
But the pandemic has created a new normal, and all three major credit bureaus are allowing people to check their credit reports on a weekly basis until April 2022. Deciding when to check your credit can be puzzling, but it ultimately comes down to how confident you are about your credit history. For some, checking it once a year is enough, while others may prefer to check it weekly following financial hardship or uncertainty during the pandemic.
At times like these, you should anticipate things perhaps falling through the cracks, Boneparth says.
Boneparth says checking your credit report every week may be a little excessive, but that it could also be a useful tool for anyone who has suspended or deferred payments to make sure lenders are marking their credit history correctly.;
Banks are allowing customers to either defer or reduce payments, and the concern may be that those payments would be marked as delinquent instead of current, Boneparth says. For individuals who are taking their financial institutions up on whatever offers to do that, it could make sense to more regularly check your credit report to make sure everything is the way it should be.
Wait Up To 45 Days For The Results
After you dispute credit reporting errors with a credit bureau, it typically has 30 days to investigate your claim. It must notify you of the results five days after completing the investigation. However, it can take up to 45 days under the following circumstances:
- Youve submitted a dispute after receiving a free credit report from AnnualCreditReport.com
- During the 30-day investigation window, you submit new materials and documents
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Mistake #1: Filing For Bankruptcy
Some people think they need a fresh start and decide to ârepairâ their credit by filing for bankruptcy. Unfortunately, bankruptcy will not improve your credit rating, it will remain on your credit report for up to 10 years, and even when itâs gone, many lenders will ask if youâve ever filed for bankruptcy as part of the loan application process and use that as a reason for not approving a loan.
Disputing Credit Report Errors
There are several reasons why you want to fix errors on your credit report. For one, you are entitled to by law and since there are no fees involved, itâs to your financial advantage to do so. Another reason is because negative information on your credit report will lower your credit score and make you less creditworthy. The lower your credit score, the higher the interest rate youâll be offered by potential lenders, costing you more money. So, failing to dispute incorrect information could be a costly mistake. If youâre going to file a dispute, you have the option of doing so in writing or online.
If youâre going to file your dispute in writing, your dispute letter should contain the following information:
Your contact information ;
If there is a Report Confirmation number on your credit report, include it in your dispute letter.
Identify the incorrect information and explain why the information is incomplete or incorrect. Make sure to include the creditorâs information, especially the account number in case you have more than one account with that creditor. Include a copy of the page of your credit report that has the incorrect information and highlight that area.
Confirm the correct address and department youâre sending your dispute letter to. Your letter should be sent certified with a return receipt requested; that way you have proof it was received.
For further guidance, you can review the sample letter posted on the Federal Trade Commissionâs website.
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Keep A Paper Trail Wait For A Response
Under the;Fair Credit Reporting Act, the bureaus are required to investigate claims of error. But how thoroughly they investigate is unclear.
Weve seen a lot of reports that they spend 3 to 5 minutes per dispute, Rheingold said.
They have this automated system where you send in a dispute, its turned into a computer code, sent to the furnisher and then it gets sort of parroted back to you in a denial, and nothing is really investigated or solved, he added.
The law gives the bureaus between 30 and 45 days to respond, but because the process is so automated, most consumers hear back within a few weeks.
In the meantime, make sure you hold onto your paperwork and keep it organized.
If you do end up having to go to court, you need to be well documented, Ulzheimer said.
Create a file, keep copies of all of your supporting documents and of all correspondence to and from each bureau.
If the bureau makes a correction to your report as a result of their investigation, they should send you a free copy of your new, corrected report.
You can also ask the bureau to send notices of the correction to any company that received your report in the last six months.
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Why Check Your Credit Report
Your credit report is a record of how well you manage credit. Errors on your credit report can give lenders the wrong impression. If there’s an error on your credit report, a lender may turn you down for credit cards or loans, or charge you a higher interest rate. You may also not be able to rent a house or apartment or get a job.
Errors can also be a sign that someone is trying to steal your identity. They may be trying to open credit cards, mortgages or other loans under your name.
Take a close look at your credit report at least once a year to see if there are any errors.
Request Your Free Medical History Report
You have the right to get one free copy of your medical history report, also known as your MIB consumer file, each year. You can request a copy for:
- Someone else, as a legal guardian
- Someone else, as an agent under power of attorney
You can request a medical history report online from MIB or by phone at 1-866-692-6901.
Not everyone has a medical history report. Even if you currently have an insurance plan, you wonât have a report if:
- You havenât applied for insurance within the last seven years
- Your insurance policy is through a group or employer policy
- The insurance company isnt a member of MIB
- You didnt give an insurer permission to submit your medical reports to MIB
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Fixing Credit Report Errors
To ensure mistakes are corrected as quickly as possible, contact both the credit bureau and organization that provided the information to the bureau. Both these parties are responsible for correcting inaccurate or incomplete information in your report under the Fair Credit Reporting Act.
Keep in mind that all three of the credit bureaus now accept the filing of disputes online, with Experian now only accepting online submissions.
Find out how to initiate a dispute online.
Begin by telling the credit bureau what information you believe is inaccurate. Credit bureaus must investigate the item in question-usually within 30 days-unless they consider your dispute frivolous. Include copies of documents that support your position. In addition to providing your complete name and address, your communication should:
- Clearly identify each disputed item in your report.
- State the facts and explain why you dispute the information.
- Request deletion or correction.
You may also want to enclose a copy of your report with the items in question circled. Your communication may look something like this sample.
If mailing a letter, send it by certified mail, return receipt requested, so you can document that the credit bureau did, in fact, receive your correspondence. Also, keep copies of your dispute letter and enclosures. If you want help disputing mistakes on your credit report, myFICO can help you write a free letter in minutes.
How To Fix Mistakes On Your Credit Report
You cant fix mistakes on your credit report. Only the company that creates your credit report a credit bureau has the power to change that information. But that doesnt mean youre powerless. Federal law gives you several rights when it comes to your credit information.
The Fair Credit Reporting Act lets you dispute items on your credit report that you believe is incorrect. When you dispute an item, the credit bureau investigates your claim. In most cases, a bureau has up to 30 days to verify that the information on your report is accurate. If it cant, it must delete the item from your report.
You can dispute credit reporting errors online, over the phone, or via mail. Typically, old-fashioned mail is best. Write a simple letter explaining the problem and ask the credit bureau to delete the mistake from your report. Along with your dispute letter, you can send a copy of your credit report and highlight the errors, if you like.
The Federal Trade Commission recommends sending dispute letters to the credit bureaus by certified mail with a return receipt requested.
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Mistake #1: Paying Debt Collectors
It may sound counterintuitive, but paying a debt collector can cause unforeseen damage. If, for example, you have old debt that has outlived the statute of limitations, making a payment on that debt could update the debt. If you are unsure about the validity or status of the debt, itâs important not to pay until and unless the debt collector proves the debt is legit and current. Itâs important to remember that debt collectors are experts at trying to frighten you into paying up. Donât pay based on anything verbal. Written communication is the only acceptable form of communication.