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Disputing Errors On Credit Reports: How to Think Outside the Box

According to a report released by the Federal Trade Commission in 2013, 21 percent of American consumers have errors on their credit reports. And since the major credit reporting bureaus track the credit histories of roughly 200 million Americans, that means we can estimate some 42 million of us have errors on our credit reports. That’s a lot of errors!

So what’s the key takeaway from this data? If you’re not checking your credit reports regularly, you really should be!

Credit reports and credit scores serve as your personal reputation in the financial world, which means you need to make sure they are as accurate as possible. And since we apparently can’t rely on the credit reporting bureaus to get it right all the time, it’s vital that we take the initiative to check our credit reports every year, dispute mistakes, and get them corrected.

Based upon my experience moderating CreditNet's Credit Talk Forum since 2008 and helping thousands of consumers navigate their own credit report woes, here are 5 tips to help you think outside the box when reviewing your credit reports and disputing errors.

1. Get Your Credit Reports Online from AnnualCreditReport.com

Ignore all the other “free credit report” sites out there and go directly to AnnualCreditReport.com where you can get your Experian, Equifax, and TransUnion credit reports for free each year. You’ll need to provide your Social Security Number and be prepared to answer some questions in order to confirm your identity too. It’s a fairly painless process.

2. Find an Error? Don’t Automatically Dispute Online via the Credit Bureau!

Credit reporting agencies essentially report what data furnishers (banks, credit card companies, etc.) tell them to report. That means that if your bank reports something in error, the credit bureaus will report the same error too.

So, if you find an error and simply dispute it online through the credit reporting agency like most people do, a computer system will handle your request and just verify the error that’s being reported by the data furnisher in the first place. It’s a huge waste of time for everyone involved!

For major errors, like charge-offs or credit cards that aren’t even yours, try thinking a bit outside the box and going directly to the source instead. You should be able to find the original creditor’s contact information listed right on your credit reports alongside the item in question.

3. Request Validation from the Original Creditor

Next, you’ll want to craft a short and direct letter that basically tells the original creditor they’re trying to collect an invalid debt and they’re violating the Fair Debt Collection Practices Act. You may even want to add that you’ll hire attorney if necessary. Please don’t copy some random form letter you find online either.

Take the time to write a short letter in your own words, and then send it off to the original creditor via CMRRR (Certified Mail Return Receipt Requested). Often, you will find that this direct communication alone will be enough to get false errors removed.

4. Don’t Forget to Negotiate!

Some errors we think are false might actually turn out to be true. If that’s the case, don’t forget that you can still try to negotiate with the creditor.

If your goal is to get the negative mark removed from your credit reports, it can’t hurt to at least ask for removal in return for immediate payment. Creditors aren’t really supposed to agree to these types of arrangements, but they still do. If they do agree, make sure you get it in writing. If they refuse, you’re not in any worse of a position than you were prior to asking.

5. Follow Up with a Written Dispute via the Credit Bureau

If your previous validation letter to the original creditor receives no response, or they are unable to validate the debt, follow up by submitting a written dispute to the credit reporting bureau along with any evidence you have to support your claim. Once again, avoid the online dispute process and send your letter CMRRR in hopes that an actual human being will review your documentation and respond appropriately.

The credit bureau then has 30 days to complete their inquiry and decide if the debt it valid or not. Since you’ve done your due diligence and provided documentation supporting your claim, hopefully their response will be that the debt has been deleted from your credit reports entirely!

Don't Procrastinate

Have you checked your credit reports yet this year? If not, set some time aside on your calendar right now and make it happen this month. It won't take much of your time, but if you follow these tips and stay on top of your credit reports each year, I promise you won't regret it.

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Joshua Heckathorn's picture

Joshua Heckathorn was President of Creditnet, is a credit expert and has been featured on CNNMoney, FOX Business, Yahoo Finance, The Street, and many other national publications during the past ten years.  He received a Bachelor of Science in Management (Finance) from Brigham Young University's Marriott School of Business and earned his MBA from Seattle University.

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