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There are several obvious reasons to worry about your credit score, and very few reasons why you should ignore them. After all, if you ever plan to buy a home or take out a car loan, you need good credit and a solid credit history. Bad credit can even come back when renting an apartment or trying to apply for certain jobs.
But your score isn’t the only detail to look out for. You’ll also need to keep an eye on your credit report – the document that lists your formal credit history, including any accounts you have open, balances due, and payments you have made.
Your report and your score are intertwined. If bad information gets on your credit report as a result of fraud or hoax, it can easily cause your credit score to decline. Likewise, having a clear credit report with only true (and positive) information can help improve your credit score.
For this reason, every year you should get a free copy of your credit report from all three credit reporting agencies – Experian, Equifax, and TransUnion. Fortunately, this part is easy to do through AnnualCreditReport.com.
How to dispute information on your credit report
Once you have a copy of your credit report from all three offices, you should double-check all of the details to make sure they are correct. Incorrect information you see on your report could include:
- Mistakes about your name or personal information
- Accounts that aren’t even yours
- Accounts owned by someone whose name is similar to yours
- Closed accounts that are reported as open
- Incorrectly reported late payments
- Accounts listed multiple times
- Incorrect balances on accounts
- Incorrect credit limits on accounts
Thanks to the Fair Credit Reporting Act (FCRA), both the credit reporting agency and whoever provides them with information are responsible for correcting any misinformation in your credit report. That said, if a particular merchant or bank reports an account that is not yours or has an incorrect balance, both the credit bureau and the merchant or bank will need to work together to fix things.
If you find a bug, here are some steps you should take right away:
Inform the Schufa with the wrong information of the error
The first step you should take is to let the credit reporting agency know of your mistake, keeping in mind that not all credit reporting agencies may have the same information. You should give them written notice of the bug, taking special care to list important details about the bug with proper documentation. The Federal Trade Commission (FTC) even offers a sample letter you can use if you need help.
Note that credit bureaus typically have 30 days to investigate your claim and get back to you with a response. You are also required to forward the information you sent to the provider who passed the information on to you.
Notify the person who provided the information about the error
You should also provide copies of any documents proving that an error has occurred to the company reporting the wrong information. Make sure you include all of the information you need to prove your claim, along with copies of the supporting documents. The FTC has another sample dispute settlement letter that you can use in this case.
Make sure your credit report is updated
In principle, credit agencies are obliged to inform you in writing of the results of your case. They are also legally required to give you another free copy of your credit report if your dispute has caused a permanent change.
You can also ask the credit reporting agency to send notices of any corrections to anyone who has requested your credit report within the last six months. You can even have an updated copy sent to anyone who has asked for a revised version of your credit report for labor law reasons.
Take care of your credit
While the steps above may sound like a chore, understanding the damage that incorrect information on your credit report can do is important. For example, if you include inaccurate late payments on your report, your creditworthiness could go down through no fault of your own. And if your credit report has accounts that aren’t even yours, it could mean a much bigger problem, like outright identity theft.
Fortunately, the small amount of time it takes to challenge an article on your credit report can really pay off. Finally, any negative information that you can clear should stop pulling your score down right away.
However, you should also keep in mind that you can only remove false negative information from your credit reports. Any harmful information that is true must remain on your report until sufficient time has passed. In general, negative information and reporting can stay on your credit report for up to seven years and bankruptcy can stay on your report for 10 years.
The bottom line
Mistakes happen all the time, and they may never be revealed if you don’t find them yourself. Not only do you keep track of your credit reports, but you can also take advantage of a free service that will notify you of new accounts on your behalf or fluctuations in your creditworthiness. CreditKarma.com and CreditSesame.com are two that offer a similar free service with these features, so they’re both worth checking out.
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