This is part 3 of a 5 part series
Part 1 – Credit Reporting Agencies
Part 2 – What’s in Your Credit History?
Part 3 – Correcting Credit Report Errors
Part 4 – Rebuilding Your Credit
Part 5 – Quick Fix Methods & Other Tales From the Crypt
Correcting Credit Report Errors
It’s been estimated that as many as 50% of credit files have errors contained in them. This is not surprising when you consider the industry collects more than 2 billion pieces of credit related information each month and generates more than 550 million credit reports on 180 million consumers every year.
If you find errors in your credit report, complete the special form that is provided along with it. All of the Big Three include this research or investigation request form.
You can also attach a letter or additional information to your completed form as well as any evidence that helps prove the error in your report, such as copies of receipts, canceled checks, correspondence between the creditor and yourself.
This letter will go a long way to creating the paper trail you might need later on. Especially if legal action becomes necessary. Make sure when you send this letter it is sent via certified mail and ask for a signed receipt to guarantee that the right person sees it.
This letter will set in motion an investigation process from the Big Three and they will try to respond within 30 days.
Once the credit bureau receives your letter, it will ask the creditor involved to verify the disputed information, or public record if applicable. If they find it truly was a error, or if they cannot verify the disputed information, by law they must delete the information from your credit record. If however the credit bureau confirms the debt, and this is frequently done by a superficial investigation , they will let the report stand as it was. This does not mean the battle is over however. Credit bureaus tend to believe their customers word over the consumers.
If they have still not corrected the problem, you’re ready for the second process. First see if you can find additional documentation to help further substantiate the claim. Make copies of it and send it along with another letter. Don’t forget to copy all letters and correspondence as well as documenting phone calls and conversations and file it. Send the letter as before, i.e. certified mail with a return receipt requested. Next contact the creditor involved and ask that it correct the problem. Do this by certified letter as well. To make sure the creditor follows your instructions, ask for copies of the correction in writing.
Another option to be considered for resolving this credit record problem is to call your state attorney general’s office or Office of Consumer Affairs to see if they can help. Their answer will vary from state to state. Many states have consumer protection laws that are stronger than the Fair Credit Reporting Act of Congress. Contact them by writing with all of the pertinent information and follow up with a phone call.
If you still can’t get satisfaction and want to stop short of a law suit, the FCRA gives you the option to put a written statement of up to 100 words explaining your side of the issue within your credit report. This is allowed under law if the credit bureau’s investigation fails to resolve your complaint. The law also requires that the credit bureau must make the statement a permanent part of your credit record and that it must be included whenever there is a request for a copy of your report. If you need help writing your statement, the FCRA requires credit reporting agencies to provide someone to assist you. (This alone could be a gratifying experience at this point.)
Now you’re at the point where you have to take the gloves off.
1. File a formal complaint within the Federal Trade Commission. This is the agency that regulates the credit bureaus. Although they will not take action on behalf of an individual consumer, they will move against, as they have in the past, a credit reporting agency if it receives a sufficient number of complaints. Credit bureaus hate these formal complaints with the FTC and sometimes the mere threat of it can go a long way in resolving your complaint.
Federal Trade Commission
Bureau of Consumer Protection
Washington, DC 20580
2. The Big Kahuna — Legal Action. The FCRA gives you the option of pursuing legal action if you are unable to resolve a credit record problem. It says that you may sue a credit reporting agency or the creditor, whichever is at fault, and that the suit can be for actual and punitive damages. (See “I Told You This Would Be Fun.”)
If the courts decides in your favor, you can collect court costs and attorney fees. To win a case you will have to prove they acted negligently and this is where you will begin to have an appreciation for all of that paper work you filed away.
Depending on the laws in your state, you may be able to use the FCRA or your own state’s credit reporting law to sue in small claims court. If this is not an option, you can take your case to a traditional civil court.
Many communities offer sources of low cost and even no cost legal assistance. Among these are legal aid, law school clinics and clinics run by your area’s bar association. They all have different income-qualifying levels so check your area.