Friday, February 27, 2009

Reviewing Your Credit Report Yearly

It is critical that you periodically review your credit report for inaccuracies or omissions, especially if you're considering making a major purchase, such as buying a home. Checking in advance on the accuracy of credit card and other financial information in your credit file could speed the credit-granting process.

If you've been denied credit, insurance, or employment because of information supplied by a CRA, the FCRA says the company you applied to must give you the CRA's name, address, and telephone number. If you contact the agency for a copy of your report within 60 days of receiving a denial notice, the report is free. In addition, you're entitled to one free copy of your report a year if you certify in writing that (1) you're unemployed and plan to look for a job within 60 days, (2) you're on welfare, or (3) your report is inaccurate because of fraud. Otherwise, a CRA may charge you up to $9.00 for a copy of your report.

You can request a copy of your credit report by simply calling a credit bureau. The three national credit bureaus are:

  • Equifax
    P.O. Box 740241, Atlanta, GA 30374-0241; (800) 685-1111
  • Experian (formerly TRW)
    P.O. Box 2002, Allen, TX 75013; (888) EXPERIAN (397-3742)
  • TransUnion
    P.O. Box 1000, Chester, PA 19022; (800) 916-8800

Under the FCRA, both the CRA and the organization that provided the information, such as a bank or credit card company, have responsibilities for correcting inaccurate or incomplete information in your report. To protect all your rights under the law, contact both the CRA and the information provider.

First, tell the CRA in writing what information you believe is inaccurate. Include copies (NOT originals) of documents that support your position and all pertinent information. Enclose a copy of your report with the items in question circled. Send your letter by certified mail, return receipt requested, so you can document what the CRA received. Keep copies of your dispute letter.

CRAs must reinvestigate the items in question unless they consider your dispute frivolous. Disputed information that cannot be verified must be deleted from your file. If your report contains erroneous information, the CRA must correct it. If an item is incomplete, the CRA must complete it. If your file shows an account that belongs to another person, the CRA must delete it. When the reinvestigation is complete, the CRA must give you the written results and a free copy of your report if the dispute results in a change.

Upon request, the CRA must send notices of corrections to anyone who received your report in the past six months. Job applicants can have a corrected copy of their report sent to anyone who received a copy during the past two years for employment purposes.

Second, tell the creditor or other information provider in writing that you dispute an item. When negative information in your report is accurate, only the passage of time can assure its removal. Accurate negative information will stay on your report for seven years, but there are exceptions:

  • Information about criminal convictions may be reported without any time limitation.
  • Bankruptcy information may be reported for 10 years.
  • Credit information reported in response to an application for a job with a salary of more than $75,000 has no time limit.
  • Credit information reported because of an application for more than $150,000 worth of credit or life insurance has no time limit.
  • Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations runs out, whichever is longer.
  • Criminal convictions can be reported without any time limit.

Your credit file may not reflect all your credit accounts. Although most national department store and all-purpose bank credit card accounts will be included in your file, not all creditors supply information to CRAs. If you've been told you were denied credit because of an "insufficient credit file" or "no credit file" and you have accounts with creditors that don't appear in your credit file, ask the CRA to add this information to future reports. You should, note that if these creditors do not report to the CRA on a regular basis, these added items will not be updated in your file.

Below is a sample letter that could be used to dispute an inaccurate credit report.

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Date

Your Name
Your Address
Your City, State, Zip Code

Complaint Department
Name of Credit Reporting Agency
Address
City, State, Zip Code

Dear Sir or Madam:

I am writing to dispute the following information in my file. The items I dispute are also encircled on the attached copy of the report I received.

(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.)

This item is (inaccurate or incomplete) because (describe what is inaccurate or incomplete and why). I am requesting that the item be deleted (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, court documents) supporting my position. Please reinvestigate this (these) matter(s) and (delete or correct) the disputed item(s) as soon as possible.

Sincerely,

Your name

Enclosures: (List what you are enclosing)

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Taking care of credit history will help you protect not only your future buying power, but will ensure you are not a victim of credit fraud or identity left. If you have questions about how this can affect your specific financial situation, contact your accountant of financial advisor.

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