It is advisable for anyone planning a major financial transaction such as a mortgage application, to obtain a copy of their credit reports prior to proceeding. It also pays to check the reports before applying for employment or renting a home. Inaccurate information can have a detrimental effect on such applications and it is wise to discover inaccuracies before applying, rather than after. If reports record incorrect information regarding debt it is imperative to resolve the matter by disputing it with the agency.
Every consumer who utilizes credit builds up a credit history through reports compiled by the three major credit reporting agencies, Equifax, Experian and TransUnion. These agencies record the information which lenders supply based on credit inquiries and repayment of credit. Lenders are bound by the reporting rules documented in the Fair Credit Reporting Act. In theory credit reports should accurately reflect a consumers handling of credit but inaccuracies are inevitable as the system is not infallible.
In many instances inaccuracies which indicate erroneous debt are not discovered until an applicant is turned down for credit or employment. In such instances the lender or employer must disclose which of the three bureaus reported the information which resulted in the rejection. Consumers are then entitled to request a free copy of their credit report within sixty days. Additionally every consumer is entitled to one free copy of each of their three credit reports once a year.
In order to file a dispute a copy of the credit report is needed. This will provide the details of the lender that provided the inaccurate information showing late or missed payments which then register as debt on the report. The simplest way to dispute debt on a credit report is to submit an online dispute direct to the credit reporting agency. Each agency has a dedicated online dispute department. Disputes can also be submitted by phone or mail. It is advisable to also contact the lender that provided the information to the agency.
Alternatively one can open the dispute online through Myfico.com which also provides information and advice on handling credit disputes. They provide a sample dispute letter for those uncertain of how to proceed. Myfico.com is a site operated by the Fair Isaacs Corporation which is responsible for the Fico credit score which is reliant on information provided by the credit reporting agencies.
The credit bureau will require certain information to deal with a dispute. The standard required information is the account number of the lender who reported the disputed item and the reason for the dispute. All the required information is available on the credit report.
Only inaccurate information can be removed from a credit report and debt that is an accurate reflection of credit behaviour will remain on file. The credit reporting agencies aim to resolve disputes within thirty days. If a dispute is favorably resolved the disputed item will be removed. If it is not resolved favorably a statement of up to one hundred words can be added to the credit report.
Debt which appears on credit reports due to inaccurate reporting or identity theft will result in a lower credit score. This in turn can lead to credit applications being denied or higher interest rates applied. Employers and landlords cannot access an individuals credit score but do have access to credit reports. It is thus wise to check these reports before applying for credit, employment, rentals or insurance and dispute any inaccuracies. When disputes are resolved satisfactorily credit history will then reflect an accurate record.