Everything You Need to Know About Credit Report Disputes
If you do not know anything about your credit report, it may seem like a scary thing to you. It does not have to be. You should find out as much information as you can about it so that you have all the knowledge you need. Your credit report can be a great asset to you, or a major deterrent from you doing the things you want. It is one of the deciding factors for you to get credit, mortgages, insurance and possibly a new job. It is important that you have a full understanding of your credit report and credit report disputes if you find incorrect information. Continue reading to find out more.
What Is A Credit Report?
You may have heard the terms credit record, credit report, and credit score but you may not realize they are not always the same thing. Often credit record and credit report are used interchangeably. Credit score is something different and I will explain more in the next section. Back to credit reports...it does show your credit score, but that is not the only information it contains. Your credit report gives lenders and other information about you. Keep in mind, it does not show the full story. It shows items such as late payments, but it does not tell the story of why the payment was late.
Your credit report shows your full given name and your current name (if it is different). It also shows any names that you have used. It also shows the various spellings of your names that you have used, if applicable. Your social security number is on your credit report. It shows every address that you have used. There may even be some related addresses that show up, even if you have not lived there. You could have possibly received mail at that address for some random reason, so that address may show up on your credit report. Phone numbers also show up on your credit report. It has current and old phone numbers. Any spouses that you currently have or had in the past also show up on your credit report.
In addition to all of that, your credit report shows all types of credit that you have had and how you used it. It shows loans and mortgages. It also shows any late or missed payments that you have made. It shows any bankruptcies that you have had. As you can see your credit report holds a lot of information about you, so it is really important that you verify the information and file credit report disputes if you find incorrect information.
What Is A Credit Score?
I mentioned above that your credit score is posted to your credit report. Your credit score is a three digit number that gives lenders an idea of your credit worthiness. Remember I said that it gives an idea of what has happened, such as missed payments, but it does not show why the payments were missed. With all the information contained in your report, there is some key information missing. Your credit score is supposed to be a simplified and easy to understand way for lenders to take a quick peek and decide if they want to look a little deeper in lending your credit. As you can see, understanding your credit score is nothing complex.
While lenders rely heavily on credit scores, they do understand they may not have a clear picture of what is happening. Often, the lenders are willing to talk to you about what they see on the report. They want to give you an opportunity to explain what has happened because it may not be a clear picture of how you use credit. This is also why it is important that you know what is listed on your credit report so you can see what all potential lenders see. You should also file credit report disputes when the information is not correct.
Disputing a Credit Report
Disputing a credit report is not something that should make you nervous and you should definitely do it if you find any incorrect information. So here are some points to remember.
Look at Your Credit Report
You cannot dispute a credit report if you don’t know what it contains. You are entitled to a free copy of your credit report every year. It is important that you view credit report on a regular basis. I may have mentioned this a time or two already, but it is important for you to understand. If the information you see is not correct, you must file credit report disputes. In addition to the general information that is on your credit report, you should pay attention to some other items when looking at your credit report. It shows your credit utilization, which lenders prefer that you have under 30 percent. It is the percentage of credit you have compared to how much you use.
Lenders do not want you to use the full amount of the credit available to you. They want to see that you have it available if you need it. That seems a bit counter-intuitive, right? They are really making sure you are not reckless with your credit. Another item you want to look for when looking at your credit report is your mix of credit. Lenders like to see that you have a good mix of credit and are using it all responsibly. There are really two main types of credit, revolving credit, and installment. If you have a mix of those, then you are doing well.
What Do I Do If There Is Wrong Information?
It does happen that your credit report shows incorrect information. That is why credit report disputes are so important. The first thing you should know is that if you dispute an item on your credit report, it does not impact your credit score. There are some specific items you should look for when it comes to inaccurate information on your report. There are some common areas that most disputes fall into. Items can be reported as though they are in collections when they are not. Items can be reported as late payments when they were not late. Bankruptcies should be removed in 7 to 10 years and foreclosures should be removed in 7 years, but it may not happen on its own. There may be credit lines listed as yours that really are not.
What Happens When I File A Dispute?
Credit report disputes are letters to the credit bureaus with specific language that details items you have found to be incorrect on your credit report. They contain legal information including an explanation from you, stating why you believe the information is inaccurate. You must also provide documentation in support of your statements. You cannot just say that a specific piece of information is wrong without providing some proof that it is. When the credit bureau removes the incorrect information and updates your credit report in your favor. It can improve your credit score. You must keep in mind that there are three different credit bureaus. When one updates your information, it does not update all of them. Be sure to address incorrect information on all reports. Not all credit bureaus have all the same information, so you need to check each of them carefully.
When sending a dispute letter, you must include your name, address, date of birth, social security number and the account number the credit bureau has. You should provide information that is as detailed as it can be when you are filing a dispute. It should include today's date and the information of the specific credit bureau you are asking to correct the information. You must include a description that is clear and a brief of the error you believe is on your credit report. You have to include the documentation and information about the documentation that you are including with your letter. Be sure to include a copy of your credit report with the incorrect information highlighted. You must include a copy of your valid picture ID that is government-issued, such as a driver's license. You also need to include a utility bill or some other documentation to provide proof of your address.
Can It Be Denied?
Yes, it does happen that your request is dismissed, if you will. Sometimes credit report disputes are rejected and the credit bureau states the information they have is completely correct. Sometimes the credit bureaus ask for more information from you. Provide them the information they need. If they reject your letter the first time, submit it again. Perhaps you can provide more information in the second letter than may encourage the bureau to approve your dispute. It may actually take a few tries before they agree to approve your dispute and updating your credit report. Sometimes, if you can word the letter slightly differently on a second attempt then you may be able to get an approval on a second or third attempt. If you know your information is absolutely correct and you have a valid proof of it, you may have to contact an attorney.
Can I Improve My Credit Score Other Ways?
There is some good news here, even if your credit report disputes are not approved. There are other ways that you can improve your credit score. I will say that having credit report disputes approved is the fastest way to improve your credit score. Another great way, that may not be fast, but it is effective, to improve your credit score is to make your payments on time. Whatever payments that you have due, be sure to make those payments on time and in their full amount. One of the most common ways to negatively impact your credit score is to miss or make late payments. You want to avoid doing that whenever you can. You should always pay all of your bills on time.
Another way you can improve your credit score is to decrease the amount of credit that you are currently using. There are two items that can decrease your credit score, one is credit utilization and the other is your debt to income ratio. Each of them is slightly different. Credit utilization is the amount of your available credit that you are using. As mentioned above, lenders want you to have 30 percent of less of credit utilization. The way this looks in numbers is:
You have $10,000 of available credit. 30 percent of that is $3,000. If you are using more than $3,000 of available credit, then you have more than 30 percent of credit utilization. When you have a high amount of debt, most likely your credit utilization is too high.
Debt to income ratio is the amount of debt that you are carrying and how it compares to how much income you have. The more debt that you have means you have a higher debt to income ratio and lenders do not often like to see that. When you pay down your debt, you are decreasing your credit utilization and your debt to income ratio. You should focus on paying off as much debt as you can, as quickly as you can.
What Is Not On My Credit Report?
You credit report does not tell people about who you are as a person. It does not say that you are a good person. Even if you do not have the best credit, that does not mean that you are not a good person. The items on your credit report are not indicative of those things. While your credit report may list spouse names, it does not indicate if you are currently married, or if you have been divorced. It does not know how nasty the divorce may have gotten or how much debt it may have put you in. It does not give any indication of a personal problem you may have had or if you have a period of time when you or a loved one was really sick.
Some lenders do not want to know they why, all they care about is what is displayed on your credit report. Other lenders may have an interest. You should be prepared to provide all of the information to all potential lenders. This may help them decide if they are willing to lend you money. You should explain why it happened and why it will not happen again. You also want to be prepared to tell a potential lender if you have filed any credit report disputes that may not have been resolved.
Should I Be Worried About Identity Theft?
Monitor Your Credit. Creditry Can Help You.
Identity theft is a real concern. It is something of which you should be aware. When you see incorrect information on your credit report and you file credit report disputes, you should pay attention if it might be a fraud. According to Forbes, 84 percent of people experienced misuse of credit card or account information. Fortunately, this is easy to handle and most people did not have a financial loss related to the misuse. You must report the fraud immediately. For the most part, banks and credit card companies are really good about handling the misuse. However, you should check your credit report to make sure those items are not posted to your report. You should keep all information you have as a result of the misuse, just in case you need it. If you see the misuse appear on your credit report, you will need that documentation to have it removed. You are responsible for your own credit report. No one else is going to watch it for you. When you see a problem, you have to be the one to resolve it.
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Conclusion
I have shared a large amount of information about credit report disputes. It is important that you understand the information that is represented on your credit report. You also must make sure that the information that is on your report is correct and accurate. It is your responsibility. If you think that the information is incorrect, you must do your homework to find out if what you think is wrong is actually wrong. You will have to provide the documentation to prove your statement that it is not correct.
If you cannot back up your claim with factual documents, the credit bureau is not going to approve your dispute. Pulling your credit report is only step one. Then you have to review it. Then you have to find the wrong information. You must then send a letter with the appropriate documentation. You should work hard to maintain your credit score. It impacts just about everything you want to do.