Making Sure Your Credit Report Is Correct

Posted by Nick Niesen on October 29th, 2010

Q. How do I read my credit report?
A. Once you've ordered and received your credit report, the next step is to understand it and make sure it is correct. Your credit report is a history of your debts and how you have paid them, and you should review it carefully. Each consumer reporting company arranges its reports in a slightly different format, but all the reports have similar groups of information and share some basic categories. You will see:

Personal Information: including your name, address, Social Security number, date of birth, and current employment.

Credit Account Information: listing all the credit accounts you have opened in the last seven to 10 years-sometimes longer. It includes accounts that are currently active and closed accounts. You will see specific information, including:

- account number;
- creditor's name;
- current balance;
- date the account was opened;
- timeliness of payments;
- number of late payments;
- credit limit or loan amount.

A consumer reporting company may separate this information into "accounts in good standing" and "accounts past due."

Be sure everything in your credit report is correct; down to the letter and number. Are account numbers correct? Is the payment history up to date? Check the report against your own records. Even small mistakes can cause big headaches later on.

Inquiries: listing all companies and individuals who have asked to see your credit history. There are two types of inquiries.

Hard inquiries, which you initiate, include applications for credit, housing, or loans. Creditors, employers, insurance companies, or landlords can see the hard inquiries when they evaluate your creditworthiness.

Soft inquiries are created when companies look at your report before they send you a pre-approved offer, when you request your credit report, and when your existing creditors monitor your account. You are the only person who can see soft inquiries, and they do not have an impact on your creditworthiness.

Public Records: These records stay on your report for different lengths of time:

- tax liens;
- foreclosures;
- bankruptcy files;
- unpaid court judgments, including child support judgments;
- criminal convictions.

Many people are surprised to find accounts they thought were closed are still listed as open. If you find this, contact the creditor and officially close the old, inactive account.

Q. What are some common errors I might find on my credit report?
A. Information on your credit history comes in from many different sources. Each CRC may have slightly different information or even slightly different mistakes in your report, so it's important to check all three companies' reports. Remember: serious errors on your report can affect your ability to get a loan, a job, or insurance, and could make you pay a higher interest rate to borrow money. As you read the reports, look for:

Information that is about you, but includes mistakes:

- misspellings or numerical mistakes in birthdates or addresses;
- the same loan listed more than once;
- a lack of positive information; for example, that you paid up a delinquent account, or resolved a legal matter;
- accounts that are closed but are listed as open.
- Information that does not belong on your report:

For example, information about Mr. Johnson Sr. might be included in the report for Mr. Johnson Jr., or Rob Smith's information might be included in Robert Smith's report.
Information that is about you, but is not current and should be removed include old addresses, employers, or a previous spouse's information.

Q. How long can a CRC report negative information?
A. Only the passage of time will remove most accurate negative information. Most accurate negative information remains for seven years. Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer. Bankruptcy information can be reported for 10 years. There is no time limit for reporting information about criminal convictions.

Q. What can I do about errors on my report?
A. You can dispute information for free.

1. As soon as possible, write to both the CRC and the person or company who gave the information to the CRC. If the problem is with your credit card, write to the credit card company. Include your full name, address, and clearly identify every item you dispute. Explain the facts and what information you think is inaccurate. Ask them to cancel or delete the information. Send copies, not originals, of documents that support your position. Send the letter by certified mail, return receipt requested, for proof that the CRC got the letter.

2. Usually, the CRC must investigate within 30 days and send copies of your dispute to the information provider. The information provider (for example, your credit card company) must investigate, and send results to the CRC. If the information provider finds that the information was wrong, as you claimed, it must notify every national CRC. Then, the incorrect information must be deleted.

3. When the investigations are over, the CRC must give you written results and a copy of your report, if they made changes because of your dispute. This free report does not count as your annual free report. You can ask the CRC to send a correction notice to anyone who got your report in the last six months. If an item is changed or removed, the CRC cannot put it back in your file-unless the information provider can prove that the information is accurate and complete. Even then, the CRC must give you written notice.

Q. What if the CRC or information provider won't change the item I dispute?
A. You can ask the CRC to include a statement of the dispute in your file. It will appear in future reports. You can also ask the CRC to send your statement to anyone who got a copy of your report recently, but there may be a fee for this. If you tell an information provider that you dispute an item, your dispute notice must be included each time the information provider reports the item to one of the CRCs.

Q. Who can help me fix problems in my credit report?
A. No one can legally remove accurate, current negative information from your report.
Everything a credit repair company will do for a fee, you can do yourself for low cost or no cost. Don't believe the companies who offer to 'erase bad credit', 'create a new credit identity', or 'remove bankruptcies & judgments from your file forever.' Companies that promise to clean up your credit report for money cannot make good on the promise. The money you pay these companies will be lost forever, and your credit report will not be repaired.

If you decide to get help with your report, choose a company that obeys the law.
Under law, credit repair companies must give you:

- a written contract listing your rights and obligations;
- an explanation of the total cost of services;
- a description of the work they will do;
- a statement of any guarantees they make; and
- the full company name and address.

Watch for danger signs when you choose a company. Avoid a company that:

- charges you for services before they complete the promised services;
- starts doing work for you before you have signed a written contract and waited 3 days. During the 3-day period, you can cancel the contract without paying any fees;
- does not explain your rights and what you can do for free;
- says you should not call the CRC yourself;
- urges you to invent anew' credit report for yourself by applying for an employer identification number to use instead of your Social Security number. It is illegal to apply for an employer identification number under false pretenses, and to buy a new Social Security number.