Did you know the FTC did a study a few years ago and found that more than 1 in 5 Americans had an error on their credit report? Errors that could be making you look like a riskier borrower than you actually are.
And so if you’re looking to get late payments, charge-offs, and collections deleted from your credit report to help repair your credit, you need to understand how to properly dispute them with the credit bureaus.
Now that you got free copies of your credit reports and reviewed them for errors, here are two simple steps you can follow to dispute negative accounts:
- Dispute the negative item with the credit bureau. Draft a letter (template below) to the credit bureau that recorded the negative item.
- Dispute the negative item with the lender. If the credit bureau verifies the negative item, it’s time to draft a letter (template below) to the lender requesting that they verify the item.
Let’s walk through each of these steps in order.
Step 1: Dispute the negative item with the credit bureau
Remember that not all lenders and companies report to all three credit bureaus, so you may have an incorrect negative item appear on one of your credit reports, but not the others.
So be sure to dispute the negative item in question only with the credit bureau where the item appears.
For example, if you have a late credit card payment show up on your Experian credit report, but not on Equifax or TransUnion, then you would ONLY contact Experian to get the item removed.
So now it’s time to draft your letter. There are a million template letters on the internet, but we like this one from the FTC.
[Your City, State, Zip Code]
[City, State, Zip Code]
Dear Sir or Madam:
I am writing to dispute the following information in my file. I have circled the items I dispute on the attached copy of the report I received.
This item [identify item(s) disputed by name of source, such as creditors or tax court, and identify type of item, such as credit account, judgment, etc.] is [inaccurate or incomplete] because [describe what is inaccurate or incomplete and why]. I am requesting that the item be removed [or request another specific change] to correct the information.
Enclosed are copies of [use this sentence if applicable and describe any enclosed documentation, such as payment records and court documents] supporting my position. Please reinvestigate this [these]matter[s] and [delete or correct] the disputed item[s] as soon as possible.
Enclosures: [List what you are enclosing.]
Some important things to keep in mind with your letter and request:
- Be sure to send your letter via certified mail (this gives you the legal proof that they received your letter).
- Include a copy of your credit report with your items in dispute highlighted.
- Include any supporting documentation, such as payment records or court documents.
- The credit bureaus must consider your request to investigate, by law.
- If they are unable to verify the negative item as true and accurate, they are obligated to delete it.
- The credit bureau has 30 days to respond to your request.
- In their response, they will state that either a) they have deleted the negative item, or b) that they have verified it as accurate.
If the credit bureau ends up claiming that they have verified the item in dispute, don’t worry—this is usually the case, and it’s time to move on to the next step.
Step 2: Dispute the negative item with the lender
Since the credit bureau claimed the negative item you inquired about came back as “verified”, the next step is to send another letter, this time to the company or lender in question (e.g. credit card company).
The strategy here is that we want to put the burden of proof on the lender—they need to dig up and provide the necessary documentation that proves you were late on a payment, or whatever the issue is.
If they can’t do this or don’t feel like doing it, then they must delete the negative item.
As far as letter templates go, we can use another one provided by the FTC, and again recommend sending by certified mail:
[Your City, State, Zip Code]
[City, State, Zip Code]
I am writing to dispute the following information that your company provided to [give the name of the credit reporting company whose report has incorrect information]. I have circled the items I dispute on the attached copy of the credit report I received.
This item [identify item(s) disputed by type of item, such as credit account, judgment, etc., and your account number or another method for the information provider to locate your account] is [inaccurate or incomplete] because [describe what is inaccurate or incomplete and why]. I am requesting that [name of company] have the item(s) removed [or request another specific change] to correct the information.
Enclosed are copies of [use this sentence if applicable and describe any enclosed documents, such as payment records and court documents] supporting my position. Please reinvestigate this [these] matter[s] and contact the national credit reporting companies to which you provided this information to have them[delete or correct] the disputed item[s] as soon as possible.
Enclosures: [List what you are enclosing.]
And here are some important things to keep in mind with this letter and request:
- The lender is legally obligated to respond to your letter—usually within 30-45 days.
- Do not admit fault or guilt in your letter! Stick to the template and leave your personal “story” out of it—it ends up causing you more harm than good.
- In the lender’s response, they will either delete the negative mark or state that it is accurate and correct.
If you’re lucky, the lender will agree to delete the negative item, either because they don’t want to go through the hassle of digging up all that documentation, or maybe they just want to keep you on as a customer.
And the lender is also obligated to notify the credit bureaus to correct the information.
What happens if they won’t remove the negative item?
In a best-case scenario, either the credit bureau or the creditor is unable or unwilling to validate the negative item on your file, in which case it gets deleted from your credit report.
But what happens after the investigation, and both the credit bureau or creditor are claiming the negative item is valid?
To be honest, you don’t have a lot of recourse, but here are some steps you can take:
- You can ask the credit bureau to add a statement in your file describing your side of the dispute
- You can file a complaint with the Consumer Financial Protection Board if you feel you were treated unfairly, such as the dispute taking too long, or if there’s still a valid error on your report.
Common credit report errors
Now you understand the process of disputing errors, but what items should you actually look for to dispute in the first place?
Several common credit errors could be negatively affecting your credit score without your knowledge. And the sooner you get these corrected, the better off your credit will be and the better your lending terms will be.
Incorrect personal information
Probably the most common credit report error is incorrect personal information.
Be sure to look closely at things like your name, employment information (if it’s on there), social security number, phone number, and addresses.
Here’s what this section looks like on TransUnion’s credit report:
Sometimes people with similar names can be listed, and their credit might be affecting yours. This is rare, but it can happen.
Keep in mind, though, that you might see some slight misspellings of your name. This can sometimes happen if a lender submits your information wrong. And it’s nothing to be concerned about as long as it is not another person’s name that is affecting your credit.
You might also see that your address is outdated. Occasionally, if you haven’t applied for or used your credit in a while, this information may not be updated. This is also nothing to worry about as long as all the addresses listed were actually yours at one time.
Duplicate and fraudulent accounts
Occasionally, accounts can be listed more than once. Even if it’s not a negative item, it can hurt your credit because it adds to the amount of debt you have reported, so it’s something to watch out for.
More concerning, though, are fraudulent accounts, which are probably the most detrimental to your credit.
Many times, an identity thief will steal someone’s information and open credit card accounts in their name. Then, of course, they don’t pay the bills, and the victim’s credit is affected. In 2016 alone, more than 15 million Americans were victims of identity theft.
Here is what the accounts section looks like on a TransUnion report, for example:
You want to be on the lookout for any accounts that you don’t recognize or remember initiating.
By the way, fraud is the main reason FACTA was implemented, making it mandatory for credit bureaus to allow you to get your credit reports free, and this is your best defense against identity theft if you make the effort to stay on top of things.
But there are also some great credit monitoring services you can sign up for that will give you an extra line of defense against fraud. We highly recommend checking into something like LifeLock or Experian ID Protection if you’ve ever been the victim of identity theft or if your information has been compromised.
Did you know some information is supposed to fall off your credit reports automatically after a certain number of years?
Here’s a table showing you the types of items on your report, and up to how long they can stay on your report:
|Late payments||Seven years|
|Charge offs||Seven years|
|Foreclosures||Seven years from the date it was filed|
|Hard inquiries||Two years (but only affect your credit score for one year)|
|Bankruptcy||Seven years (Chapter 13 bankruptcy) to ten years (Chapter 7 bankruptcy)|
|Evictions||Treated either as a collection or judgment depending on the landlord’s action|
|Tax liens||Seven years (if paid)|
|Judgments||Depends on the state (generally five to ten years)|
For example, late payments are supposed to fall off after seven years. So if you notice a bad debt on your credit report that is older than that, you can ask to have it removed.