6 Tips for Maintaining a Flawless Credit Report
According to the Federal Trade Commission, around 25% of people have errors on their credit report that could affect their credit score. There’s a one in four chance that mistakes on your report are unfairly dragging your credit score down, which can end up costing you thousands of dollars. Luckily, you can review your credit reports and challenge inaccurate items.
It’s important to know how to keep your credit report clean of errors. If you find an error in your report, you can dispute it. If the disputed item can’t be verified by the creditor or reporting agency, it may be removed from your report. But, depending on the type of issue, it could take time to resolve—you may notice credit score improvements in a few months, or it could take several years. To help by being proactive now, here are 6 tips to keep your credit report clean:
1. Review your credit report for errors. Start by obtaining your free annual credit reports from Experian, Equifax, and TransUnion through AnnualCreditReport.com or by requesting them directly from each agency. Carefully examine each report for inaccuracies in personal and financial information.
2. Create a list of errors. Each disputed item must be challenged individually with the respective credit bureau. If multiple errors exist on the same account, for example, two late payments, one challenge is sufficient for both by specifying the corrections. Assess all discrepancies to determine whether to pursue self-repair or to enlist a professional service.
3. Gather supporting documentation. Collect relevant evidence to strengthen your dispute, ensuring clarity on what is required for each type of error. For instance, victims of identity theft should compile evidence like unfamiliar addresses or unauthorized accounts.
4. Write a dispute letter. Craft a detailed dispute letter for each credit bureau, including your contact details, a description of the disputed item, reasons for its inaccuracy, and accompanying documentation. Clearly state your request for prompt removal of the erroneous information and retain copies of all submitted documents.
5. Monitor your claim. Credit bureaus must investigate disputes within 30 days of receipt. Upon completing the investigation, they must inform you of their decision within five days in writing. If your claim is upheld, the bureau will correct or remove the error. Should they reject your claim, you have the right to file a further complaint.
6. Consider credit repair services. If handling disputes independently proves challenging or unsuccessful, enlist the help of a reputable credit repair agency. These professionals specialize in navigating credit report disputes and can manage the process on your behalf. The Consumer Financial Protection Bureau (CFPB) provides tips on how to find a reputable credit counselor.
How Credit Report Errors Occur
Understanding the various types of errors that can occur is important in maintaining an accurate credit report. Here are some of the most common issues that could affect your creditworthiness:
• Mixed files. If someone with the same or a similar name applies for credit, a piece of their file can become mixed with yours. For example, a consumer with a common name such as “John A. Smith” might see his file mixed with a John B. Smith or a John A. Smith, Jr.
• Identity theft. If someone has stolen your Social Security number, they can open a new account in your name. This information appears on your credit report and can be particularly difficult to remove.
• Furnisher errors. Furnishers are banks, debt collectors, and others that report the information that shows up on your credit report. A clerical error or data issue with the furnisher can result in an error being passed on to your credit report.
• Re-aging of old debts. Certain debts are meant to age off your credit report after a set period. Re-aging happens when a debt is sold to a new collector, resetting its reporting clock and potentially causing it to appear multiple times on your report. This can harm your credit score beyond the intended timeframe.
You should also continuously monitor your credit report and score to confirm the removal of inaccuracies and to promptly address any new errors within your credit report. You can easily stay vigilant and avoid negative impacts with NIHFCU’s My Credit Rx — your daily dose of credit awareness that allows you to examine your credit report, monitor your credit score, and receive credit monitoring notifications regarding your credit status, 24/7.
Resource: Credit.com
