Repairing your Credit Report

Your credit rating is an indication of how well you manage your financial transactions and a statement about your trustworthiness. Not only do financial institutions such as banks, car dealerships and other lenders use it as a way of determining whether or not they can trust you to pay back a loan, they reward you with lower interest rates ("on approved credit") for maintaining a healthy credit history. When you apply for car insurance, the insurance agent uses your credit rating to assess your risk and set your premium. Because your credit rating is so important, errors can easily occur, and identity theft is rampant, it is imperative that you periodically check your credit report and attempt to correct any errors.

Credit card companies and other businesses with which you make purchases by means of credit report these transactions to credit bureaus such as Equifax, Experian and Trans Union. When a company furnishes information to a credit bureau, even a simple misspelling can be a disaster for your credit rating. Unless you are constantly on top your credit rating, you may never discover the cause. The Federal Trade Commission recently reported that approximately sixteen percent of credit reports contained errors which negatively impacted the consumer's ability to secure loans.

How Errors Happen
Human error is the most common cause for credit report discrepancies, including simple typographical errors, failure to report a payment, or transposing someone else's information. You may also be the victim of a crime, when a person assumes your identity and fails to pay on a credit card with your name on it. In addition, there is little motivation for companies to be meticulous about furnishing accurate information to credit bureaus, since a law is in effect which prohibits you from filing a lawsuit against them for these mistakes.

Repair Strategy
The law is on the consumer's side when he disputes his credit report since the credit bureau must review the facts and decide if a correction is necessary. Begin your investigation by calling the creditor who furnished the credit bureau with the incorrect information. Obtain the name and employee identification number of the person who checks your account. If an error is discovered, you can then direct the credit bureau to that person for confirmation. The review can begin when the consumer submits indisputable proof in the form of transaction records, including all account numbers and a concise narrative description. The better the documentation you have to prove your case, the more likely your credit report will be examined and repaired.

Send your request for review to all three credit bureaus by regular mail and keep copies and accurate records. Use the USPS Return Receipt Request to document proof of delivery, the recipient's name, and actual mailing address. Using the forms on the credit bureau's websites does not seem to work as well as mailing them your request. Also send a copy of the complaint to the credit card company or other creditor who furnished the credit bureau with incorrect information.

If your repeated request for correcting the error is ignored, consult an attorney for advice about filing a lawsuit. Revisions in the law now make provisions in the case of clear cut negligence by the credit bureau or the furnisher of the information. Maintaining records documenting your multiple attempts and the credit bureau's failure to perform even a cursory investigation put you in a stronger position for recovery. It is in your best interest to track the status of your credit and aggressively repair any errors.