How do I correct errors on my report?

Few aspects of both consumer and real estate financing have come under as much written and verbal gunfire as has the credit reporting industry. The skyrocketing volume of credit transactions has put a tremendous strain on credit reporting agencies which deal with millions of requests for information daily.

As a result, a recent report to the U.S. Congress stated that as many as 40% of individual credit histories contain errors of some kind. A single missed keystroke by a data entry clerk, for example, can assign a delinquent account to the wrong file. Corrective information submitted by an individual can be misrouted or entered erroneously.

Our economy could not function without credit reporting. We need it to make purchases both large and small, to enable retailers to accept our checks, to obtain loans for homes, cars or college education. It is necessary for corporations to manage their cash flow for the overall benefit of the economy, and for us as individuals to manage our own finances.

For all these reasons, we must be vigilant about the accuracy of our credit reports. We need to know what goes into them, how to read them, how they are used and how to challenge errors when they occur.

While credit might have once been a private matter between oneself and one's banker, this is no longer the case. Every purchase we make on credit creates a record somewhere and these records flow into the huge databases from which our credit histories are constructed. Those histories, in turn, are used by nearly all credit grantors to determine how reliable we are in the use of credit, and to decide whether or not to extend it to us.

One way to fix an error is to contact the creditor reporting it. If you can get the creditor to agree that what was reported is an error, have them give you that information in writing, plus agree to report the updated information to the bureaus.

The Fair Credit Reporting Act gives you the right to dispute both the accuracy and completeness of your credit history. Any of the three credit reporting agencies must respond to your dispute. They must reinvestigate and record the results of their investigation "within a reasonable period of time." While this period remains undefined, practice indicates it means thirty days. If you don't get results within thirty days, have your attorney send the bureau a letter, together with copies of your correspondence.

If the reporting agency cannot verify a disputed entry, it must delete it. If the information is incomplete, they must complete it. For example, if you were temporarily delinquent on an account, and then brought it current and the agency's report does not reflect that, they must correct your record. Also, should your file show someone else's account (this sometimes happens with "junior-senior" relationships or with common names) the agency must delete it.

At your request (be sure you do request it) the agency involved must send a notice of correction to anyone who has received your credit report within the last six months.

In the event that some unforeseen misfortune resulted in a cluster of late payments in your record, you may send a short statement about the circumstances to each of the agencies. You may wish to report illness, unexpected unemployment, the death of a spouse, military call-up, or unexpected medical expenses. Be brief and to the point. No whining. This statement will be added to your file and will be disclosed whenever your credit file is accessed.