This is great news for the tens of thousands of people whose reports contain errors.
By Lisa L. Gill
The country’s three largest credit bureaus (Equifax, Experian and TransUnion) said this week that they would give consumers permanent access to free weekly credit reports through AnnualCreditReport.com, something they already began doing at the beginning of the pandemic. COVID-19.
This is a big deal, as Consumer Reports financial policy analyst Ryan Reynolds says, because much of a person’s financial life—the ability to get a car, a student or mortgage loan, a credit card, or even the ability to renting an apartment, signing a contract for a cell phone plan, or getting a job) is affected by the information in your credit report. “Having free access can help consumers ensure that their reports are free of errors that could substantially reduce their credit score and harm their financial prospects,” says the expert.
Errors on credit reports are a problem. In fact, they are the most common complaint filed by consumers with the Consumer Financial Protection Bureau about credit reporting, according to a recent CR analysis. What’s more, a nationally representative CR survey (PDF) of 2,174 American adults in January 2022 found that 14% of people who had ever checked their credit reports said they found errors.
“Checking your own credit report is the only way to ensure that information about you, sold in the flow of commerce without your knowledge or consent, is accurate,” says Ed Mierzwinski, senior director of US PIRG (Public Interest Research Groups). United States) that advocates for these issues. “These reports should have been free from the beginning, and it only took a record number of complaints to the Consumer Financial Protection Bureau (CFPB) for this to happen.”
What’s more, millions of people have errors on their credit reports, says Chi Chi Wu, senior attorney at the National Consumer Law Center and a consumer advocate in the area of credit reporting. “From a landmark study by the Federal Trade Commission, we can see that in 1 in 20 cases, the error is serious enough to cause you to be denied credit or have to pay more for it.”
Previously, only one credit report from each of the bureaus was available for free per year (with the exception of Equifax, which had provided six free reports per year after a massive data breach in 2017). Beyond that, offices charged up to $14 per report.
“We recognize the important role that credit reports play in people’s financial lives and encourage consumers to regularly check their credit history, an important way to understand their current credit situation and prepare for important future financial milestones,” the directors stated. executives from the three agencies in a joint statement.
How to fix errors on your credit report
There are a few steps to follow if you receive your report and find an error, and it may require some work.
Take the example of Steven Saxon, 69, of Sonoma County, California, who had to deal with a major mistake he encountered five years ago when searching for a home improvement loan. During that time, he says his score dropped by a considerable amount and, upon reviewing his credit report, he discovered a medical bill sent to collections that was not his, but from a provider he had seen more than a decade earlier.
Saxon filed a dispute with the credit bureau, where she found the error, and made more than a dozen calls to the doctor’s office, the debt collector and the credit bureau. “I worked really hard to fix this,” he says, and it was worth it. “By doing so, my score increased substantially.”
“In fact, when a credit report lists a debt in collections as late, it could lower your credit score by up to 100 points,” adds CR’s Reynolds. (Credit scores are determined using formulas based on information found in your credit report.)
“Other errors, such as a debt that has been paid but is reported as unpaid, or accounts that should be reported as closed but are listed as still open, can also lower your credit score,” Reynolds says.
If you find an error in your report, here are six steps you should take to help remedy the situation.
File a dispute with each credit bureau. The three major credit bureaus (Equifax, Experian, and TransUnion) don’t communicate with each other, so it’s smart to contact each of them. Filing a dispute with each credit bureau, rather than the lender or bank, offers a protection that governs how quickly it should be handled. It also provides a legal avenue to sue the credit bureaus and creditors or collectors, if necessary.
Gather evidence. If you are filing a dispute about a debt that was incorrectly reported, include account statements or payment records. Credit bureaus may dismiss claims without sufficient information and support them as “frivolous.” And resubmitted claims may be rejected if they are deemed similar to previous ones.
Leave a paper trail. Write a letter explaining the problem. Avoid using standardized online forms provided by credit bureaus, which could oversimplify your dispute by requiring you to choose only from predetermined checkboxes.
Send all materials by certified mail. Keep copies for yourself. This makes it easier to ensure that credit agencies follow legal deadlines. Credit bureaus have five days to forward the disputed information to the financial institution or debt collector that provided the information. If that company does not investigate and respond to the dispute in a timely manner, the credit bureaus are legally required to delete the information.
If that doesn’t work, file a complaint with the CFPB. Explain the error and lack of resolution. Include important dates, amounts, and communications with the credit bureaus, and attach any supporting documentation. You can file a complaint with the CFPB.
If you lose your dispute, consider working with an experienced attorney. You can sue a credit bureau or financial institution for errors on your credit report. Find a lawyer through the National Association of Consumer Advocates.
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