Today I had an email from a family member asking for some advice on how to correct an error on a credit report.  There are several reasons why a credit report may show inaccurate or misrepresented information and it’s important to know how to take the steps to contact the credit reporting agencies (Experian, Equifax and Trans Union).  All three are separate entities and each has a separate matrix to rate our credit/spending patterns.  Each have a range for our FICO scores from 400-850 (approximately).

Most creditors, banks and collection agencies will report to each agency on a monthly basis.  If you are aware of inaccurate information on your credit report it’s a good idea to make sure which agency is reporting the information.  Often times only one or two of the agencies will report inaccurate information.  In the case of my family member there was some very poor communication on the part of the creditor and I thought it’d be a good idea to post some helpful steps to disputing this information.

1. Access your free credit report – Often times you may become aware of an error or inaccurate information on only one agency.  If you have a credit report given to you by a bank or credit company they will likely only provide a report from a single agency (most likely Equifax) in order to reduce the cost of pulling three credit reports.  If you’re applying for a mortgage you’ll be provided with a tri-merge credit report which combines information from all three agencies.  Go to www.annualcreditreport.com and download your free credit report from each credit reporting agency.  You will need create a log-in and provide some information to receive the credit reports.  The free credit report will show you information reporting from each agency, however, you will not be provided a score.  For the purposes of challenging an error, it’s not necessary to have a score, but if you insist on having a score you can choose to pay for the score through this website.    It is very important to go to this website as there are hundreds of websites that want you to pay for the report which should be free (i.e. freecreditreport.com).
2. Identify the agency or agencies reporting the error – Print the report from each agency.  Identify the error or inaccurate infomration on each report.
3. Document the error – It’s important to document your case for the inaccurate information or error.  You will want to provide detailed information about why the information is inaccurate or an error.
4. Dispute the information with the appropriate agency – Each credit reporting agency has a website with detailed information on how to dispute these errors.  Visit the website and proceed accordingly.  Click to visit each agency’s official dispute page: Equifax / Experian / Trans Union. It is very important for you to remember your log-in information so you can follow up.
5. Check the result(s) of the dispute – Most disputes take 30-45 days for a response from the agency.  Check back with the agency’s website and view the result.
6. Contact me if you have any questions – seriously, I’m here to help – Much if this information can be overwhelming at times.  Give me a call or shoot me an email and I’ll answer any questions you may have.

Good luck!

The FICO score, implemented by the Fair Isaac Corporation, is the score lenders use in analyzing your credit history for most credit products.  The score is reported from the three major national credit reporting bureau:  Experian, TransUnion, and Equifax.  The credit scores analyze the credit related information on the credit reports.  Each bureau varies in their calculation.  Below is a basic breakdown for the FICO analysis of your credit history.

The percentages are not exact, but close estimates to the way a FICO score is analyzed.

1. 35% – Your payment history: Have you paid yoru credit accounts one time?  Late payments, bankruptcies and other negative items can hurt your credit score.  But a solid record of on-time payments helps your score.

2. 30% – How much you owe: FICO scores look at the amounts you owe on all your accounts, the number of accounts with balances, and how much your available credit you are using.  The more you owe compared to your credit limit, the lower your score will be – this is considered credit utilization.

3. 15% – Length of credit history: A longer credit history will increase your score.  However, you can get a high score with a short credit history if the rest of your credit report shows responsible credit management.

4. 10% – New credit: If you have recently opened or applied for new credit accounts, your credit score will weigh this fact agains the rest of your credit history.  FICO scores distinguish between a search for a single loan and a search for many new credit lines, in part by the length of time over which inquiries occur.  If you need a loan, do your shopping within a focused period of time, such as two weeks or 30 days, to avoid lowering your FICO score.

5. 10% – Miscellaneous factors: Several minor factors also can influence your score.  For example, having a variety of credit types on your credit report – auto loans, mortgages, credit cards, personal lines of credit – is normal for someone with longer credit histories and can add slightly to their scores.

Credit scores are an important part of your financial foundation.  If you have questions about your credit or need to obtain some useful resources please don’t hesitate to call or email conrad(at)conradventi(dot)com.

For more information about your FICO visit – www.fairisaac.com

Companies advertise “Credit repair” on the radio, TV, and Internet tends to be, at best, a waste of money and, at worst, a scam that could simply defraud you or (perhaps worse) involve you in fraud.  Even if a credit repair company is legitimate, there is nothing they can legally do that you can’t do yourself at no cost.  This is because there really is no legal way to “repair” bad credit if the history thereof is accurate – only time and ongoing responsible credit management can do that.

Credit repair companies can do no more for your credit legally than you can.  Although they cannot provide you with a clean report, some may encourage you to violate federal law.  These credit repair operations work by seeking out consumers who have been denied loans or credit based on their poor credit histories, or people who have filed for bankruptcy.  They promise to provide consumers with instructions on how to develop a new credit identity.  This method of credit repair is called “file segregation”.

File segregation is a scam.  The companies recommend that you register for an Employee Identification Number (EIN) or Individual Taxpayer Identification Number (TIN) and they encourage you to use it in place of your Social Security number, which is illegal.

Your legal rights – The Federal Fair Credit Reporting Act guarantees your right to dispute inaccurate information in your credit report free of charge, so if any of the problems you’ve had are due to inaccurate information, you can file a dispute with one of the nation’s national credit reporting agencies to have it corrected or removed.

If the information is accurate, however, you’ll need to focus on building better credit for the future rather than trying to have it removed from your report.  Most lenders are primarily interested in your payment patterns for the past two years, so if you begin now to pay every bill on time it can have a positive impact on your credit relatively quickly.

The truth is that only time and establishing a positive credit history can “clean up” your credit.  One of the best first steps to getting your credit back on track is seeing what is on your credit report.  This way, you can take steps to dispute inaccurate information that may be contained on your report and, at the same time, assess your current credit debt.

The national consumer credit reporting companies allow you to access a free credit report every 12 months.  To access this free report on a secured website you can visit www.annualcreditreport.com – TransUnion, Experian, and Equifax are the names of the companies that report on a national level.  The “free credit report,” however, does not provide you with your credit score.  I wouldn’t recommend paying the extra fee to see your score as the information about credit history is what will need to be assessed.

The next step might be to contact old accounts that carry outstanding debt and arrange payment plans. As you begin to manage your debt successfully, you should also check your credit report on a regular basis (every 12 months) to make sure your good efforts are being reported.

I would be more than happy to review the report with you or answer any questions you may have regarding information on the report.

Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.