Undiscovered errors on your credit report can impact your financial future in many ways—a lower credit score, higher interest rates and elevated insurance premiums, just to name a few. A good financial plan will include knowing the state of your credit. But how do you do that?
Review your full credit report (not just your credit score) at least once per year. Here are some steps to take if you find errors:
Where to start
First, obtain a copy of your credit report by visiting annualcreditreport.com—you’re entitled to a free one from each of the three major credit bureaus. Start by checking the identification fields to confirm the information is correct. Look for common errors like misspelled names, incorrect phone numbers or Social Security numbers.
Next, examine the data on each reported financial account. Be aware of red flags such as accounts you don’t recognize, duplicate accounts or incorrect information regarding balances, payments and loans. If you think you’ve found a mistake, gather supporting documentation before reaching out to the credit bureau. Providing proper documentation for each contested item initially will help the process go faster.
Letter of dispute
Now you’re ready to write your letter of dispute. Find sample letters online if you need a little help. The letter should include your personal details and information on each disputed item. Describe the error(s) and include attachments of appropriate documents to support your claim.
Organization is key
Whether physical or digital, an organized file system will make the whole process easier. Although disputes can be filed online, using the post office (sending the letter certified mail with return receipt requested) will provide a record of when it was delivered and who received it. Set a reminder to follow up after 30 days if you haven’t been contacted by the credit bureau.
Stay up to date
It’s always better to catch credit report errors early to mitigate any damage. That means checking your credit report regularly---at least once per year or if you suspect fraud or identity theft.
If you need clarification on your credit report, reach out to your financial institution for guidance.
