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Have you ever wanted to buy a house or a car? Or open a rewards credit card?
In order to have the greatest chance at getting the lowest interest rates or best terms for any of these things, you’ll want to have the best credit scores possible.
Yet there may be a hidden obstacle that could harm your chances: errors on your credit reports.
Credit reporting errors are surprisingly common. Unfortunately, it’s up to you to discover and report any inaccurate information in your files. Equifax, TransUnion and Experian, the three major credit bureaus, let you dispute inaccuracies on their respective consumer credit reports online or by mail. You can use your Credit Karma account to help you keep tabs on your TransUnion and Equifax credit reports, and make sure there aren’t any errors listed. You can also check for errors on your credit reports through annualcreditreport.com.
Fortunately, it is possible to get these errors removed. You’ll need to file a dispute online or write a credit dispute letter, which isn’t difficult.
There are no penalties for disputing errors on your credit reports. If you don’t agree with the outcome of a credit dispute, you can file a complaint with the Consumer Financial Protection Bureau.
Note that Credit Karma offers a Direct Dispute™ tool that can help you contest errors on your TransUnion® credit report. This tool eliminates the need to write a letter to TransUnion — but you’ll still need to write credit dispute letters, or file a dispute online, to challenge errors with Experian and Equifax. We’ll show you how to write a credit dispute letter in this article.
- What is a credit dispute letter?
- What can I dispute on my credit report?
- What should I include in my credit dispute letter?
- Sample credit dispute letter
- Where can I send my credit dispute letter?
- What about ‘pay for delete’ letters?
- What does the credit dispute process look like?
What is a credit dispute letter?
A credit dispute letter is a document you can send to the credit bureaus to point out inaccuracies on your credit reports and to request the removal of the errors. In the letter, you can explain why you believe the items are inaccurate and provide any supporting documents. If your dispute is resolved in your favor, the credit reporting company should remove the erroneous items in your file and update your report.
Not all creditors report to each of the three major consumer credit bureaus, so it’s a good idea to check for errors on your credit report from each of the three bureaus.
What can I dispute on my credit report?
Here are just a few examples of items you can dispute.
- Late payments
- Bankruptcies that haven’t been removed after seven to 10 years
- Foreclosures that haven’t been removed after seven years
Justin Chidester, owner and certified financial planner and accredited financial counselor with Wealth Mode Financial Planning, gives an example of how credit dispute letters can work.
“I had one client who had a misunderstanding around the time he obtained in-store financing for an engagement ring,” Chidester says. “He felt like they were unclear about when his payments would start, and he ended up having a 30- to 59-day late payment reported.”
Chidester wrote a letter to the credit bureau requesting that the information be deleted on the grounds that the store was “misleading about payment arrangements.” Fortunately, the credit bureau listened to him and his client’s credit report was soon squeaky clean.
What should I include in my credit dispute letter?
When you write a credit dispute letter to a credit bureau, you first need to identify your credit report — this can be a bigger task than it sounds, especially since the credit bureau in question may have information from almost everyone in the country who’s being reported on. After identifying your report, you’ll need to provide information on the error, as well as an explanation as to why you’re disputing the item. And finally, your credit dispute letter should include a request for the credit bureau to remove the item from your credit report.
By giving the bureau the necessary information, it should have what it needs to make a decision on your case.
Here’s what you should include.
- Current date
- Your information (name, contact info, date of birth and account number)
- The credit bureau’s contact information
- A brief description of the error (no need to regale them with a long and complicated story)
- Any documents you may have that can help prove your point, such as payment records or court documents (make sure to mention that you’re sending these in the letter)
- Instructions about what you want the credit bureau to do (reinvestigate and remove the item from your report)
- A copy of your credit report with the error highlighted
- A scanned copy of your government-issued ID (such as your driver’s license) and a bill or some other document to prove your address
Sample credit dispute letter
123 First Lane
Anytown, FL 12345DOB: 01/01/01
PO Box 2000
Chester, PA 19016
May 1, 2018
To whom it may concern:
I am writing to inform you about an error I noticed on my TransUnion credit report (account number 1234-56789).
I am requesting that you remove this information from my credit report.
Thank you for your help.
(sign your name here)
Where can I send my credit dispute letter?
Here are the addresses for the three major credit bureaus.
PO Box 740256
Atlanta, GA 30374-0256
PO Box 9701
Allen, TX 75013
PO Box 2000
Chester, PA 19016
Make sure to keep copies of any records you send to the credit bureaus.
What about ‘pay for delete’ letters?
“Pay for delete” describes when a debt collector or creditor offers to stop reporting accounts in collections to credit bureaus in exchange for payment on the account.
This could fall into a gray area. According to the Fair Credit Reporting Act, creditors are required to furnish accurate and complete information to the credit bureaus. This applies to all the information that collections agencies or the original creditor chooses to report, but in pay-for-delete schemes, the debt holders are choosing not to report specific information.
Because of its questionable nature, it can be hard to get a debt collector or a creditor to agree to a pay-for-delete request. On their websites, the three major credit bureaus explain that creditors must report complete data. In their view, “pay for delete” is likely to be a useless and expensive process.
Even if the creditor notes that you paid your debt off, it won’t erase all the late payment notices from the original creditor from your reports.
If you have debt in collections, consider finding a National Foundation for Credit Counseling-certified counselor to help you create a debt management plan instead.
What does the credit dispute process look like?
Bureaucracies have a reputation for moving at a glacial pace. But credit bureaus are generally required to investigate the dispute within 30 days of receiving your letter. Better yet, each bureau is required to wrap up its investigation and notify you of its judgment within 90 days at the latest.
In some cases, the credit bureaus might ask for more information. They may also reject your claim.
“If you don’t get the answer you want the first time, don’t just give up,” says Jason Hamilton, a financial planner and author. “You may need to go back and forth multiple times. And if you know you are correct and can’t get the bureaus to agree with you, don’t be afraid to contact a lawyer.”
“I often have my clients send in the same letter with slightly changed verbiage for a second, and sometimes third, round,” he says, going on to describe how it’s had some success with his clients. “Occasionally, on the second or third attempt, the dispute will be resolved as requested even if the first try was rejected.”
There’s no doubt about it — finding errors on your credit reports can be especially irksome. But the rewards of successfully disputing those errors could be well worth the trouble if it improves your credit health.