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Act Quickly to Correct Credit Report ErrorsA cloudy credit report can dim the financial forecast for even the sunniest optimist. That makes it important to spot and correct credit errors promptly. "These days, it seems that our prospects are often only as good as our credit reports," says Valerie Moss, director of compliance information for the Credit Union National Association, Washington, D.C. How errors occurProblems with your credit report can be the result of a simple error, such as a misspelled name or an outdated address. But Moss points out that errors also can reflect more serious problems, such as another person's debt that has been mistakenly attached to your credit report. "Sometimes this is accidental; other times, identity theft is involved," Moss says. Identity theft occurs when someone deliberately misuses your personal information to open accounts in your name or to make purchases on credit or to borrow money. Checking your credit report for errors can help detect identity theft so you can act to protect your financial reputation. High-cost mistakeWhatever the cause, an error on a credit report can cost you in the form of higher interest rates. You might even lose access to credit. "If your credit report says you're carrying more debt than you actually are, you may be less likely to get that loan application approved or receive an offer at a favorable interest rate," Moss says. In addition, other organizations that check credit reports, ranging from employers to insurance companies, might view you negatively. "Many will view you as high risk if your credit report says you're delinquent on several accounts or carrying a huge amount of debt," Moss says. "Some may not want to take a chance on doing business with you, or even hiring you in some instances." View your reportDocument every step of the process.
Finding out whether your credit report contains errors starts with checking it at least annually. Federal law allows you to access a free copy of your credit report once every 12 months from each of the three major credit reporting companies: Equifax, Experian, and TransUnion. To check your credit report for errors, call 877-322-8228 or go online to annualcreditreport.com. You can check all three companies at the same time, or order a report from a different company every four months to monitor your report throughout the year. If you find an error in one company's report, it's wise to immediately check the others for errors as well. You're also eligible for an additional free report if you're a victim of ID theft or if you're notified that information on your credit report led to a denial of credit or services. You must request the free report within 60 days of being denied credit. Check againExperts also advise consumers to check credit reports 30 to 90 days before applying for credit or another service that uses credit reports. If you've already used the free option, checking your report again within a 12-month period will cost you up to $10.50. You can order additional reports directly from the three credit reporting companies:
Making contactMoss says you often can fix minor problems by calling the creditor that furnished the information to the credit bureau. In most cases, however, it's advisable to communicate with the credit reporting agency in writing (see sidebar for tips). Check your credit report annually to find if it contains errors.
The three major credit reporting agencies also offer online dispute resolution on their Web sites; however, you'll need to initiate your dispute in writing if documentation is needed to support your claim. Since inaccurate information often appears on more than one credit report, you should contact all three credit reporting agencies to correct errors. The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to work with consumers to correct inaccurate or incomplete information in their credit reports. The Federal Trade Commission (FTC) outlines the process for making corrections on its Web site. Rules for reviewCredit reporting agencies are required to investigate alleged errors and forward data to the organization that provided the inaccurate information. That organization must then investigate the claim and report back to the credit reporting agency. Credit reporting agencies set a timeframe of 30 to 45 days for completing this process. Once this process is complete, the credit reporting agency must give you a written report of the results. If the process results in a change to your credit report, they also must give you a free copy of your credit report. Credit reporting agencies are barred from putting disputed information back in your file unless the information provider verifies it's accurate and complete. Finally, you can request that the credit reporting agency send a notice of the correction to anyone who received a copy of your report with the past six months for credit-related purposes, or within the past two years for employment purposes. Disputed itemsIt's essential to open and read monthly account statements.
Consumers may dispute some errors with the creditor who provided the information to the credit reporting agency. When that happens, the Fair and Accurate Credit Transactions (FACT) Act gives consumers the right to dispute inaccurate information on their credit report directly with the creditor who submitted it. Moss says the National Credit Union Administration, FTC, and federal banking agencies are developing a formal procedure for handling these issues. In the meantime, consumers still can contact creditors directly to discuss inaccurate information. Consumers also can ask that a statement of the dispute be included in their credit file and distributed with future credit reports. If you prove that the information submitted by the creditor was inaccurate, the creditor is barred from reporting it again. Document everythingMoss advises consumers to document every step of the process. If you make a telephone call, record the time, the date, and the name of the representative who handled the call, as well as any action that resulted. In addition, make copies of every letter. When sending materials that prove your claim, send only copies and keep originals so you can make additional copies if your letter is misplaced. Send materials by certified mail with "return receipt requested," so you'll have proof that the credit reporting agency received it. Most important, be persistent. "Don't give up," Moss advises. "If you're not satisfied with the result, find out what additional documentation is needed to prove your claim and follow up." Read your statementsBeyond checking your credit report, Moss believes it's essential to open and read monthly statements for credit union and credit card accounts when they arrive in your mailbox or e-mail inbox. Credit reporting agencies are required to investigate alleged errors.
"Open them and track charges or debits each month to make sure there are no unauthorized transactions on your accounts," Moss says. "This simple step, plus checking your credit report at least annually, will do a lot to catch mistakes and potential identity theft before it spirals out of control." 
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