In the wake of the Federal Trade Commission report that said credit reports from the credit bureaus contained frequent errors, the National Foundation for Credit Counseling (NFCC) is offering some advice on how to understand and dispute information on them.
The NFCC says the best way for consumers to make sure their credit history reflects accurate information is to be one’s own advocate, by examining your reports for errors and taking action to correct mistakes.
They’ve compiled this list of Dos and Don’ts for consumers:
- Understand what your credit report is for – to reflect your borrowing history and provide information about where you’ve lived, if you have been arrested or sued, and/or if you have filed for bankruptcy. Credit agencies sell the information to potential lenders, landlords and employers.
- Review your credit report for accuracy at least once a year. Get a free report from each of the three major bureaus – Experian, Equifax and TransUnion – at AnnualCreditReport.com each year.
- Know your rights. The Fair Credit Reporting Act (FCRA) provides certain protections regarding the accuracy and privacy of information in credit reports. Both the credit reporting company and the party that provided the information to the bureau(s) are responsible for investigating disputes, but consumers must initiate the investigation.
- Expect a quick response. The FCRA requires investigations to commence within 30 – 45 days of the dispute being filed. Credit bureaus must forward information about the dispute to the source to begin the investigation process. If the dispute is found to have merit, the company in question must inform all three credit bureaus so they can correct the error.
- Put an explanation in your report if your dispute is not resolved. Consumers are allowed to add a statement of up to 100 words. That statement will be included in your credit report in the future.
- Not all errors are equal. While some mistakes have a negative impact on your credit score, others will not. Inaccurate account information, credit lines with lower limits than they really have, or negative information that is not correct, should be addressed immediately.
- Not all negative information will necessarily be removed. Information that is negative, but accurate, will stay on your report – only time can remove it. Most negative information will remain for seven years. Bankruptcies may stay on the report for ten years.
- No need to seek the services of a credit repair company. Anything they can do for you, you can do for yourself. And many of them charge high fees. If you do hire a credit repair company, be aware that the Credit Repair Organizations Act prohibits them from charging you before services are rendered.
Since credit scores can impact consumers’ ability to secure mortgages, car loans, credit cards, apartments, and jobs, it’s vital that they correct inaccurate information contained in credit reports. A higher credit score can result in lower interest rates and higher credit limits, so even if a credit score is good, making sure it’s the highest it can be is in a consumers’ best interest.