Bad credit makes it difficult, if not impossible, to purchase a home, buy a car or secure a credit card with an acceptable interest rate. Inaccurate information on your credit report not only impacts borrowing power, but it can also adversely affect your search for a job, renting an apartment or getting insurance for yourself, your vehicle or your home.
Credit Reports
The three national credit bureaus, Equifax, Experian and TransUnion, keep records that closely track your creditworthiness. The nation's Fair Credit Reporting Act requires these credit reporting agencies to provide you with a free copy of your credit report once every 12 months upon request (see Resources). Because problems can occur with the reporting process affecting any or all these agencies, you should request reports from all three credit reporting agencies each year. You can also obtain a free credit report if a company takes adverse action against you as a result of information provided by a credit reporting agency.
Incorrect Information
Erroneous or incorrect information that you can correct may include an omission, such as an open account with an excellent payment history that is not a part of your credit report. You may have been the victim of an incorrect posting that translated to a late mark on your credit card bill. If so, you can have the information corrected. If a credit card account or loan appears on your credit report and you have no knowledge of the transaction, you can request its removal. You can also petition for corrections concerning loan or credit card balances that are significantly more than your records indicate. Keep in mind that to effect any changes, you must provide documentation to back up your assertions.
Correcting Errors
The FCRA guarantees you access to creditors who provide information to the credit reporting agencies and the credit reporting agencies themselves. The FCRA also requires that the creditor that reports the data and the agency that assimilates it assume responsibility for correcting or deleting erroneous or incomplete information that appears in your credit report. Results of the investigation generally take 30 days.
Contact, in writing, the credit reporting agency and the creditor who provided the information. Supply copies of all supporting documents. If the information on your report is deemed incorrect, the creditor is barred by law from reporting it again. If you do not hear from either party within 30 days, recheck your credit report. If the information has not been deleted, contact the credit reporting agency for an update on your complaint.
If the information is determined accurate, it takes seven years for negative information to fall off your credit report, unless the negative report is a bankruptcy, which stays on your credit report for 10 years.
Credit Repair Services
If you would rather use a credit-repair service, give a wide berth to any company that asks for payment up front. Under the Credit Repair Organizations Act, companies that provide these services may not ask for payment in advance. Do not do business with any firm that refuses to advise you of your rights or tells you that you cannot talk directly to TransUnion, Equifax or Experian. Other tactics employed by questionable credit repair organizations include asking you to create a different identity by applying for an employer identification number to use in place of your Social Security number and telling you to question every entry in your credit report, no matter its legitimacy.
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