Home Buyer Tips: Correcting Mistakes in Your Credit Score Files
Your credit report counts for a lot. And the information it contains can make all the difference when you apply for a mortgage to buy a home, not just whether you approved or not, but also the interest rate you will be charged. So that the information credit bureaus hold about you is correct is very important.
What many people do not realize though is that to find a mistake or two on your credit report is really not all unusual. All of the credit reporting agencies accept information about consumers from lenders but they do not actually do very much to verify its accuracy before adding it to a consumers credit file.
Add to that the the fact that not all lenders report to both credit bureaus – Equifax Canada and TransUnion Canada- often meaning that an account that has been settled or closed is still shown as open or owing on certain credit reports and you can see the potential for mistakes is certainly there.
Finding Mistakes on your Credit Report
Because a mistake on your credit report can cost you dearly, it is important that even if you are not too concerned about building credit because you have good credit, you check your credit report at least once a year to make sure that inaccurate information is not hampering your credit score.
Each credit bureau is obliged to provide you with one free copy of your credit report every 12 months. When you get these reports you should go through all the entries on them to verify that they are accurate. Do not just look at negative items though, check everything. Unfortunately, the first time some people realize that they have had their identity stolen is when they check their credit report and see credit accounts listed that they have never heard of.
Reporting a Mistake on Your Credit Report
If an entry on a credit report is a genuine mistake then you have the right to ask the credit bureau to remove it from your report. This can be done by writing a simple letter to the credit bureau and enclosing the supporting information you have (if you have any) to back up your assertion.
At this point the credit bureau is obliged to investigate your claim and will attempt to contact the creditor to get “their side of the story”. The creditor only has a short window of time in which to respond though and if they do not respond in time the entry is removed by default.
Some people are uncertain about just what an appeal letter to a credit bureau should contain. it does not have to be at all complex though. Here is a sample letter to give you an idea of what a good appeals letter looks like:
Date of the letter Your Name and address
Complaint Department Name of Credit Bureau Address
To whom it may concern I am writing to dispute the following information in my file. The items I dispute also are encircled on the attached copy of the credit report I received from you recently.
This item (identify item(s) here ) is inaccurate or incomplete because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted to correct the information. Enclosed are copies of (only use this if you have evidence that supports your claim) supporting my position. I would request that you investigate this matter and then delete the item as soon as possible.
Sincerely, Your name
It really is this simple. You should send the letter by registered mail, so that you have proof of mailing should the dispute not be resolved in a timely manner (usually 30 days or less) and you have to contact the credit bureau again, which you should do if the dispute is not resolved within a month or so.
Disputing All the Negatives on Your Credit Report
Improving a poor credit score is a major priority for a lot of people, especially those hoping to buy a home, and they will look for any way they can to speed the credit repair process up. One of the ways many of them do this is to consult a credit repair company to help them with their endeavors.
Unfortunately for all the really good, helpful credit repair services that are out there there are also a number of bad ones. Some of these companies give people a piece of advice that is very bad too – that they challenge all the negative entries on their credit report, even if they are all valid.
The reasoning behind this relates to the amount of time a creditor has to respond to an investigation by the credit bureau. That window is short and the gamble being taken by reporting a valid entry as a mistake is that the creditor will not respond in time and that the entry will then by removed by default, giving the consumer’s credit score a bit of an instant boost.
Sometimes this does work. The problem is though is that the act of reporting a valid entry on your credit file as a mistake can be considered fraud. And sending the letter can score you a count of mail fraud as well. The credit bureaus (and the law) will not care that you were acting on the advice of someone else, any and all penalties would be accessed to you, not a credit repair firm you might have worked with. and those penalties might be far worse than having a poor credit rating ever was!