There are reports that over 30% of credit reports contain incorrect information!
One of the most unnerving things that can happen to a new home shopper is to discover something incorrectly reported on their credit report. Often, these incorrect entries are damaging to their credit rating, and some could even be severe enough to prevent that home shopper from buying a home! We tend to put a lot of faith and trust in credit reporting companies, but they make mistakes too, and when they do, swift action on your part can prevent these errors from ever being seen by banks or mortgage companies.
Much of the incorrect information deals with late pays (those times when a payment was made thirty days after the due date), charge-off (a debt that was never paid in full by you), or multiple reports of the same debt.
There are a few ways to dispute a late payment report. If you made the payment on time and the payment date is incorrect, contact the credit reporting bureau and let them know in writing that you made the payment on time and provide them with any evidence you have to dispute the reported date. You can also contact the creditor directly by phone or letter, and either explain the situation to them or provide them with the evidence of your payment. In many cases, this will be enough to get the entry off your report. If you don’t have any evidence, or you were actually late with the payment, you can still ask the credit reporting company to validate the entry. They will, in turn, contact the creditor and ask them to validate the debt. If the original creditor cannot validate the payment date for that debt, the credit bureau must take that entry off your report. These validation inquiries must be made in writing to the credit bureau. Often times, a creditor will not have the information to validate the date of payment, and a simple letter will often be enough to get some of these late payments removed from your report.
Follow the same procedure for charge-offs. Write a letter to the credit reporting company disputing the charge-off and ask them to validate it.
The most common error that people find on their credit reports is multiple reports of the same debt. This often occurs with charge-offs, when the original creditor “sold” the debt to a collection agency, who reported the debt. In this case, you’ll have the original creditor and the collection agency both claiming the debt. It’s only one bad debt, but it looks like two charge-offs on your report, and the more reports of charge-offs on your report, the lower your score. In some cases, this debt may have been “sold” several times, and one charged off bad debt looks like several on your report. State and federal laws limit the number of times one dept can appear on an individual’s credit report, and making inquiries regarding these charge-offs can often clean them from your report.
Many creditors will adjust payment dates if you dispute them or can give some information regarding the actual date the loan was paid. Since many people state having credit problems after they have income or money problems, they often start pushing payment dates to the very last minute. This may work for a while, but you really reduce your margin for error once you begin to employ this tactic. For instance, if you’re paying your credit cards, mortgage or car payment at the last possible minute and something comes up (a trip to the emergency room, a flat tire, out of town trip) that causes you to miss the payment, you have no recourse, and a late payment is now on your credit report. Often, creditors will respond positively to a dispute on these bills, but only if the payment was made the very next day. Also, if you’re flirting with payment deadlines and for some reason, the person you were talking with on the phone didn’t post the payment promptly, it will show up as a late payment. Providing the creditor phone or bank records indicating that your account shows the payment was on time, but the creditor was tardy posting the payment, may get that late pay off your report. Sometimes a creditor will appear on your report, and you won’t know the debt to which they are attached. You should also inquire about these.
Upon discovering any of these things, you should immediately contact the credit bureau in writing and challenge the debt itself, the payment day or creditor’s authority to collect the debt with the following statement: “This creditor does not have the authority to collect on this account. Please delete it.” You can also challenge the collector’s authority with a letter containing this statement, “This debt collector represents an inactive debt, and this is duplicate reporting.” The collection will have to validate the debt by proving it is an active debt, and it will be removed from your report if it is not an active debt or it is a duplicate debt.
If the credit bureau refuses to remove the debt, contact the Consumer Financial Protection Bureau. This final step is not usually necessary, as the credit bureau is most interested in delivering accurate information.