Getting The Kinks Out Of Your Credit Report
When Senator Richard Bryan (D-Nev.) and his wife went to buy a house in Las Vegas last year, a routine credit check turned up a few surprises. His report listed credit cards that just "weren't ours," he says. It also showed several lawsuits that had been filed against the state of Nevada, naming Bryan because he was then governor. Bryan again found errors when he refinanced the house in January. The most glaring was a tax lien that didn't exist. "I was frankly shocked to see some of that stuff in there," he says.
Both times, Bryan got the errors deleted by writing to the credit bureaus. But, the senator says, "I'm not unmindful that John Q. Public would have more problems." Bryan is pushing a bill amending the Fair Credit Reporting Act of 1970 to help consumers fix false credit reports. The provisions include a 30-day deadline for the bureaus to resolve disputes. The bill follows a wave of criticism and lawsuits over practices by the Big Three: Equifax, Trans Union, and TRW.
`BE VIGILANT.' The furor is also encouraging the credit agencies to take steps on their own. They have made it easier and cheaper to get credit reports, but it still can be tough to delete errors. Says Edmund Mierzwinski, consumer advocate for the U.S. Public Interest Research Group: "The short answer to how to fix your credit report is be vigilant and persistent."
Start by knowing what information is collected. Credit reports contain data supplied by banks and other institutions about loans, credit cards, and bill payments. They also include job information and data culled from public records, including legal judgments. Most negative data remain on file for seven years, but bankruptcies can stay for 10 years. Creditors and others use the reports for making such decisions as granting a mortgage or renting an apartment.
Consumers can minimize errors by completing credit applications carefully, always using the same name. For example, if you use a middle initial, be sure to include it. Don't wait until you've been denied credit or shut out of a job before checking for accuracy. The Big Three enter 2 billion pieces of data into credit records monthly, so the odds of errors slipping in are high.
Consumer advocates suggest getting copies of your credit report once a year from each bureau because they collect different data. Also review your reports six months in advance of a major purchase such as a house or before seeking a job that requires a security clearance or background check.
The credit bureaus will send you the reports upon request, but they differ in how much they charge. If you're denied credit, the bureaus must provide a free copy if you request it within 30 days after being turned down. Industry practice expands that period to 60 days.
GRATIS. For consumers who are just curious, TRW now provides one free report annually. Equifax charges $8, except in a few states where the caps are lower. The company requires that you send your request in writing. Trans Union has some 300 offices that will supply the reports for an average of $15 (table).
When making your requests, ask the bureau to include a pamphlet explaining your legal rights. You can also get the information from the Federal Trade Commission, Bureau of Consumer Protection, Division of Credit Practices, Room S-4429, 6th St. and Pennsylvania Ave. NW, Washington, D.C. 20580 (202 326-3758).
The most common mistakes include credit data that belong to someone else and outstanding credit-card balances that you actually paid. If you find an error, follow the dispute resolution process set forth in the credit report. Fill out the form and return it, along with any documentation that supports your side. Send copies to the original creditor, as well as to any collection agencies.
TAKE A STAND. On average, the bureaus will respond to your complaint within 30 days, but the response time can take months. The agencies will reinvestigate the information by going to the public record or the credit grantor. If the credit bureau still can't verify the data--or does not respond in a reasonable time--it must delete the error. The consumer should then notify the other two bureaus about the change. Check your credit report in a few months to make sure the mistake isn't reappearing.
The information will stay in your file if either the credit bureau or original credit grantor disagrees with your stand. But you may write a statement telling your side of the story. The statement or a summary must be included in any future reports that contain the disputed data. Consumers who fail to get an error corrected should complain. Contact the consumer protection division of your state attorney general's office or the FTC.
You could also sue. "After your first attempt to fix the report, that's the time to do it," says consumer lawyer Joanne Faulkner of New Haven. She says many people think of a lawyer too late, after the two-year statute of limitations has run out. Winning consumers can recover actual or punitive damages, plus attorneys' fees. While litigation is a last resort, it does pay to stay on the offensive.