A drastic rise in the use of credit and debt services, namely all types of loans, credit and debit cards have led to the introduction of the system of credit worthiness or rather credit report and reporting. The system is simple. You borrow a loan, or a credit card, use the money, and return it with interest. The lender, bank, and the credit card company report the details of all your borrowings and repayments to a company known as a credit reporting agency. Some important information may include, the date of payment, the defaults, late payments, the volume of borrowings, etc. The agency puts together the information in your file, which is known as a credit history, and then rates it with the help of a mathematical formula, which is known as credit rating. This process results in the output, which is the credit score, and this information enclosed in a file is termed as a credit report. In the entire process, things may go wrong and your report can be wrong. Apart from the financial information, it also has several other personal details, such as residential address, contact information, or even income. If any information goes wrong, you are empowered by law to initiate a process to dispute it.
Disputing the credit report is important, because it is the people's passport to the financial world. Many people, including your lenders, employer, insurance agent, and clients can lawfully access this report. The world judges your ability to handle money, finances, and your financial status, with the help of this report. A mistake in the report can tarnish your credit worthiness, and sometimes even your personality.
How to Dispute a Credit Report Error
Even though one can lodge such disputes online, many experts advice attaching letters to such disputes. This letter is known as a credit report dispute letter and it is fairly easy to write it. You would have to get your credit reports from all the prominent credit rating agencies, namely, Experian, TransUnion, and Equifax. Also get your bank statements, and the statements from your lenders, and credit card companies. This is where you start auditing the statements, i.e., checking all installments, bill payment entries, along with the (wrong) credit report. By patiently checking these documents, one shall be able to spot mistakes, if any. Make copies of the statements that show the mistake and mail the letter to the agency or agencies.
Post filing a dispute, the agency launches an inquiry and starts to verify its own data, and data provided by the lenders, and the credit card companies. After the mistake is spotted, the agency corrects the report and reapplies that mathematical formula on the new data. A corrected copy of the report is sent to you for free if there are any changes, and the changes are also informed to respective lenders, companies, and to whoever the report was given in the last six months. Instead of filing disputes online, experts advice to send the disputes via post with a return receipt, as it helps in future court cases if the agency doesn't respond or goes wrong.
To simplify this procedure and to keep the report error free, keep both soft and hard copies of all your accounts and financial statements with you. Keep a handwritten record of all your repayments, dates, and even your credit card bills. It is also recommended that you check your credit report at least once a year, as the report and the credit score influences your rate of interest.