Have you checked your credit report recently? Perhaps you should. A recent Federal Trade Commission study found that 23% of consumers had errors on at least one of their three major credit reports! Even simple errors or inaccurate entries can negatively impact your credit score.
The Fair Credit Reporting Act (“FCRA”) provides consumers the right to dispute errors in their credit reports and have the information corrected or removed. Failure to correct or remove the entry after proper notice can subject the creditor or provider of the incorrect information to strict penalties, including the consumer’s damages, attorney’s fees, and costs.
Obtain Your Credit Report
First, obtain a copy of your credit report from each of the three major credit reporting bureaus: Equifax, Transunion and Experian. The FCRA requires that a free copy of your credit report be made available for access once per year. You can obtain your free credit report by visiting the government-sponsored site www.annualcreditreport.com. Please note: if you go to the site that has “free” in the title, you’ll actually have to pay for each report.
Review Your Credit Report for Inaccurate and Erroneous Info
Once you’ve obtained your credit report, carefully review it for any inaccurate or erroneous information. Be sure to review the prior addresses on file; open versus closed accounts; any negative accounts; and “trade line” items such as creditor names, balances, payment histories, and comments. I find it helpful to highlight and flag the incorrect entries as I go along so that I can easily reference them later on.
Prepare the Dispute Letter
In order to trigger the dispute and resolution process, notice of the incorrect information must be sent to the credit bureaus. I also send a copy to party furnishing the incorrect information (usually a bank or credit card company). This can be in the form of a letter or, in some cases, online through the credit bureau’s website. I prefer the old-school method of sending letters – via Certified Mail, return receipt requested – so that I have proof of mailing and receipt if it comes time to pursue legal action.
What the Dispute Letter Should Contain
The dispute letter should be as specific as possible. In particular, it should contain:
- The name of the creditor or party reporting the information, e.g., “Capital One Bank” or “Select Portfolio Servicing”;
- The type of account, e.g., “Credit Card” or “Mortgage Liability”
- The account number or last four digits;
- The reported current balance;
- The reported past-due balance (if applicable);
- The status of the account;
The letter should also set out what information, exactly, is incorrect and why it is disputed. It should request that the information be corrected or removed. I also request that the credit bureau and creditor acknowledge receipt of the letter. A sample dispute letter is provided below or can be downloaded here.
Credit Bureaus Have 30 Days to Verify the Disputed Information
The credit reporting agencies have 30 days to look into your dispute. The credit bureaus must also notify the party furnishing the incorrect information within five days of receiving your dispute.
Based on the information provided in the dispute letter, the data furnisher must investigate your dispute and verify whether the information it gave to the credit bureau is correct. If the information is not verified within 30 days or is inaccurate, then the credit bureau must remove it from your credit report.
The credit bureau will typically send a written response confirming that the information has been verified or removed from your credit report. Starting in September 2016, the credit reporting agency must also provide you with an additional free report through www.annualcreditreport.com if it corrects an error on your report. That way, you can check to verify that all the information is correct.
What if the Disputed Information is not Corrected or Removed?
The FCRA carries serious penalties for a data furnisher’s non-compliance. If a data furnisher refuses to acknowledge the disputed information or continues to report inaccurate information after receipt of the dispute letter, then it could subject to statutory damages of up to $1,000 and punitive damages for willful non-compliance. Even if the non-compliance was not intentional, the data furnisher could be liable for the consumer’s actual damages, reasonable attorneys’ fees, and court costs.
If you’ve disputed incorrect information in your credit reports and continue to encounter resistance, then I’d encourage you to talk to a consumer lawyer as soon as possible. Since the FCRA requires the data furnisher to pay your attorneys’ fees and costs if your case is successful, it may cost you little-to-nothing to hold the data furnisher accountable for its non-compliance.sample-credit-dispute-letter