Under the Fair Credit Reporting Act (FRCA), consumers have the right to dispute any incomplete, inaccurate or out-of-date information in their credit file – a situation that is more common you might suppose. According to some studies, 25 to 30 percent of reviewed credit reports included serious errors that resulted in the denial of credit to an otherwise credit-worthy consumer. FRCA rules are intended to correct these situations.
Also under the FRCA, everyone is entitled to view their credit reports from each of the big three credit reporting agencies – Experian, Equifax, and TransUnion – for free once every 12 months. Financial advisors recommend you make this an annual habit to check for errors, and if you suspect other errors it will be worth a $25 investment to make sure there is not a mistake on a report that hinders your credit-worthiness.
An error can be anything from a simple spelling mistake of one’s name to an incorrect Social Security number to a mathematical miscalculation concerning a debt to a serious inaccuracy about a bill or mortgage payment.
It can also be a delinquency that is more than seven years old and should no longer appear on your report. Information doesn’t have to be negative to be questioned. It can merely be incomplete or inaccurate.
Initiating the Dispute Process
You have two ways to initiate a dispute. First, you can contact the creditor, known as the furnisher, who supplied the disputed information to the credit bureaus. You simply ask that it be amended. Sometimes a simple error can be fixed at the source, but if that proves unsuccessful it may be necessary for the consumer to contact the credit reporting agency that issued the report.
You can dispute an item on a credit report by mail, online or over the phone. Keep written records of all your communications. Mailed credit reports also contain a dispute form, or you can fill one out each credit reporting agency’s website. When sending a dispute letter or filling out an online form, you should include copies of any documents that support your claim. Disputing a credit report costs you nothing.
Upon receiving your dispute claim, a credit agency must reinvestigate any disputed item by contacting the creditor who provided it with the data. If the creditor doesn’t respond or if the disputed item can’t be verified after reinvestigation, it must be corrected or deleted from your credit report.
Examples of disputes include:
- A debt that was paid off but is reported as open
- A charge attributed improperly to a credit card account
- A mistaken entry about a bankruptcy or foreclosure
- Identity theft
After your dispute is filed, an agency has 30 days to respond. The credit bureau must provide you with results of its re-investigation within five business days of completion, including a revised credit report detailing any changes made. It doesn’t have to reinvestigate any items it considers frivolous or ones that lack supporting information.
The agency must notify any creditor within five days of receiving a dispute notice and subsequently of whatever action is taken.
You should also contact the creditor who furnished the incomplete or incorrect information to the credit bureau to make sure it has received the updated information from the credit bureau.
After a Refusal to Correct
If an item remains in dispute even after it was deemed verified by either the creditor or the credit bureau, you still can challenge it. One way to do so is by escalating the tone of communication between you and the credit bureau and/or the furnisher. The FCRA allows you to question a credit bureau about the accuracy and completeness of its investigation of disputed data. Sometimes persistence pays off.
It’s also possible to get assistance from the Federal Trade Commission (FTC), which enforces the FCRA; the state attorney general’s office; the federal Consumer Financial Protection Bureau; and/or the local government’s consumer affairs office. You will have to reach out to make contact with any of these agencies. In some cases, one or more of them will intercede on your behalf.
If none of those actions is successful, the FCRA gives you the right to file a lawsuit against the credit agency. While it takes time and money to dispute a claim in this fashion, it may be the only way to get a credit report amended.