How to Handle Credit Report Errors
Credit Report Errors Are Common
Small errors on credit reports can have big consequences when you apply for a loan, credit, insurance or a job. But a large number of credit reports contain incorrect information.
Information on people with similar names or addresses can easily get mixed up into the same report. For example, addresses where you never lived, wrong social security numbers, and parents', siblings', or ex-spouses' accounts can show up on your report.
Negative information from such errors can lower your credit score, cause you denials of credit, higher interest rates, higher insurance premiums, loss of job opportunities or even denials of insurance coverage.
Reasons for incorrect credit report information include:
- Creditor reporting incorrect or outdated information
- Collection agency reporting an old debt with a new date
- Creditor reporting bankruptcy-discharged debt as owed or as a charge-off
- Your data merged with someone else's
- Theft of your identity
- Credit bureau error
Common Misconceptions about Credit Reports
Contrary to popular belief, your credit report is not an individual file kept on you. Instead, everyone's credit data is kept together in a large database. Each credit bureau's database contains information collected from different sources.
When your report is created, a credit bureau uses a search formula to extract data about you from its computer. But, because the formulas use loose criteria, information on different individuals often appears on the wrong reports.
Credit Bureaus Must Correct Mistakes
If your credit report contains incorrect or outdated information, both the credit bureau and the creditor providing the information are legally required to correct their errors.
Yet, legitimate disputes often do not result in removal of incorrect information from consumers' credit reports. Even when disputed information is removed, it often comes back. If this happens, the law requires credit bureaus to send consumers a notice.
Many consumers do not receive these notices. Often consumers find out only later, when they apply for credit, that previously removed, disputed information has reappeared on their credit reports.
What You Can Do
Check your reports from all credit bureaus at one time to see if they contain similar errors.
Following proper steps is important. When you dispute an item on your credit report, it is important to follow certain procedures. If you send your dispute to the creditor alone, they have no legal duty to correct the mistake. If they do remove incorrect information and it reappears, you will have no legal claim for its reappearance.
Following correct procedures also will give you legal rights you can enforce if errors are not removed or reappear after removal.
To dispute credit report errors:
- Get copies of your separate credit report directly from all credit bureaus at the same time -- don't use a "merged" report that shows all the credit bureaus on one report
- Send your dispute directly to the credit bureau
- Send a copy to the company whose account is involved
- Photocopy your signed dispute letters and keep the copies with your certified mail receipts
- Use the address for disputes indicated on your report
- Send everything by certified mail with return receipt
Who's Looking at Your Credit Report?
Your credit reports can tell you who else has been looking at your credit information. Check the companies who have requested your credit file to see whether you recognize the names listed.
Access to your full credit data is legal only for a limited number of purposes. Any other access or use is illegal and those who violate the law may be liable to you for damages.
For example, if you apply for credit, insurance or a job, the potential creditor, insurance company or employer can look at your credit report. But your current employer cannot do so unless you agree in writing.
Likewise, your insurance company may have a right to look at your credit data when considering renewal, but not after it has renewed your policy. A debt collector can access your credit data only for legitimate collection purposes on a debt you owe.
Illegal Access and Use
Those who generally do not have a legal right to view your credit data include:
- Car dealers where you are "only shopping" and do not fill out a credit application
- Former creditors with whom your account is closed
- Insurance companies phoning you and offering rate quotes
- Former creditors whose accounts were discharged in bankruptcy
- Opposing party, their lawyer or insurance company involved in litigation against you
- Ex-spouses without a court order or your authorization
Illegal access to your credit report invades your privacy. In some cases, an excess of these inquiries can lower your credit score.
Paying Off Debts Does Not Remove Information
Paying off a debt does not remove all negative information about it from your credit report. The "balance" may be reported as zero, but other negative reporting, such as late payments, settlements, collection and charge-offs can remain.
While creditors are not legally required to remove negative reporting when debts are paid, sometimes consumers can make a deal. Some creditors will agree to remove all negative references to the debt if the consumer agrees to pay the debt now.
Any such agreement should be in writing and properly worded so it is legally enforceable if the information is not removed or shows up again.
How to Obtain Your Credit Reports
Massachusetts residents have the right to a free copy of their reports every year from each of the national credit bureaus. There may be a charge for a credit report ordered over the internet. The credit bureaus frequently change their box numbers and telephone numbers. You may need to use a different number. Check credit bureau websites and credit reports you receive for updated information.
To request your credit report, contact:
701 Experian Parkway
P.O. Box 1240
Allen, TX 75013
P.O. Box 2000
Chester, PA 19022
Equifax Credit Information Services
Office of Consumer Affairs
P.O. Box 105139
Atlanta, GA 30348
If Your Rights Have Been Violated
You have a legal right to a correct credit report. Credit bureaus and creditors must "get it right." You also have a right to the privacy of your own credit data and personal information. Access to them is regulated by law.
If you feel your rights have been violated, you should contact your lawyer to plan the best course of action for your individual case.
The Law Office of Yvonne W. Rosmarin has helped many clients fight back against erroneous credit reporting and illegal access to credit data. This office can often represent consumers in such cases at little or no cost to the client.