The law gives you the right, free of charge, to contest anything on your credit report that you contend is inaccurate. This is important, because errors are common on credit reports (an item from someone else’s history can easily end up on your report, if they have the same or a similar name as you, for instance), and they can lower your score enough that you’ll be wrongfully turned down for credit, an apartment, etc.
The first thing you need to do is obtain your credit report. In fact, since there are three main credit bureaus that issue credit reports (Equifax, Experian, and Trans Union), and correcting an error on one doesn’t mean it won’t still show up on a different one, it’s not a bad idea to get all three versions of your credit report to review. You are allowed to get one of each (maybe more, depending on your state law) free per year.
If you spot an error, in the past it was necessary to deal with it exclusively through the credit bureau itself. Due to a change in the law in 2004, you also now have more ability to challenge errors through the creditor.
It is still a good idea to start with the credit bureau, but if you are not satisfied with how the credit bureau is responding to you, you can also dispute the item with the creditor and get them to let the credit bureau know there is an error in the report.
Each of the bureaus will provide you with instructions on how to contest an item. File your dispute in writing with the credit bureau, including a letter explaining fully and clearly the error you allege, and any documentation you might have that shows the item is in error (cancelled checks, bills indicating paid in full, etc.) Send copies; don’t send your originals.
If you contact the creditor as well, follow a similar procedure – everything in writing, don’t send originals, etc.
The bureau should acknowledge your dispute, and inform you as to the outcome of their investigation. Just in case they don’t, and so you don’t have to wait until the next year when you can get another free copy of your report to see if the item has been removed, you may want to send your dispute “return receipt requested” and then follow up regularly with them to see where things stand.
And remember, you may have to repeat this process with a second or a third of the bureaus as well, if the erroneous item shows up on more than one report.