A. Alice in Wonderland - Correcting Errors in your Credit Report
2005 survey by the U.S. Public Interest Research Group found that an
astounding 79% of credit reports contained errors. Consumers are
saddled with the responsibility of trying to cause the credit bureaus
to correct these errors.
The credit bureaus make ginormous profits by selling credit
reports. "To the big three, credit reports are like flakes of gold.
Each credit report issued brings in revenue ranging from 50 cents (when
delivered in bulk to large banks) to $15 (as when a report is sold to
an individual consumer). Experian reported revenues of $3.1 billion in
the year 2006, Equifax reported $1.6 billion, and Hoover's Company
Reports estimated private Trans Union's revenue at $1.2 billion.""
Bryan Achoido and Jon Swartz, Zero Day Threat, The Shocking Truth of How Banks and Credit Bureaus Help Cyber Crooks Steal Your Money and Identity, Sterling Publishing Co. (2008).
stark contrast, handling consumer disputes and correcting errors in
credit reports are purely added expenses, a drag on profits. "Thus,
credit reporting agencies generally prefer to handle disputes as
cheaply as possible." Evan Hendricks, Credit Scores and Credit Reports, How the System Really Works, What You Can Do,
Privacy Times, Inc. (2004). In a nutshell, not only is there a peculiar
absence of any market incentive to correct errors in credit reports.
It's the polar opposite: the cost of handling consumer disputes reduces
the profits of the credit bureaus. This explains, to a large degree,
why trying to correct errors in your credit report often can be a
nightmarish, time consuming, Alice in Wonderland experience.
C. The Specific Steps to Take to Correct Errors in your Credit Report: Going Down the Rabbit Hole.
Step # 1 - Obtain Your Equifax, Experian and Trans Union Credit Reports
should pull your credit reports from each of the Big Three credit
bureaus– Equifax, Experian, and Trans Union– once every 12 months. Most
consumers, including those in Colorado, are entitled to one free credit
report per year from each of the Big Three. Georgia residents, however,
have a legal right to obtain two free credit reports per year from each
of the Big Three. You can either contact the credit bureaus directly
via the contact information listed below. Alternatively, go to www.annualcreditreport.com
, or call 1-877-322-8228 to simultaneously pull your credit reports from all three credit bureaus.
there are a few smaller regional credit reporting agencies scattered
around the country, the Big Three dominate the credit reporting
marketplace. Therefore, all efforts to correct errors in your credit
reports should be focused exclusively on Equifax, Experian and Trans
Union. Credit reporting agencies:
has its corporate headquarters in a diabolical office building on
Peachtree Street in the fancy, high-flutin, high rent Buckhead district
of Atlanta. But don't mail anything to the Buckhead address. Use the
addresses below instead:
P.O. Box 740241
Atlanta, GA 30374
To report fraud: Call 800-525-6285 and write to address above
To order credit report: 800-685-1111
(free copies only obtained by mail) Experian (formerly TRW)
701 Experian Parkway Allen TX 75013
To report fraud: Call 888-397-3742 and write to address above.
To order credit report: 866-200-6020
(free copies only obtained by mail) Transunion
P.O. Box 6790
Fullerton, CA 92834
1561 E. Orangethorpe Avenue Fullerton, CA 92831
P.O. Box 390, Springfield PA 19064-0390
To report fraud: 800-680-7289 and write to address above.
To order credit report: 800-888-4213 or 1-800-916-8800
(free copies only obtained by mail)
here to see a video produced by the U.S. Department of Treasury
explaining how to pull your free credit reports. The video is short and
does contain some helpful information. Credit Report Video
You are also entitled to a free credit report if:
- a person has taken adverse action against you because of information in your credit report;
- you are the victim of identify theft and place a fraud alert in your file;
- your file contains inaccurate information as a result of fraud;
- you are on public assistance;
- you are unemployed but expect to apply for employment within 60 days.
Credit Scores - You may request a credit score from consumer
reporting agencies that create scores or distribute scores used in
residential real property loans, but you will have to pay for it.
Credit scores are numerical summaries of your credit-worthiness, at a
given point in time, based on information in your credit reports. In
some mortgage transactions, you will receive credit score information
for free from the mortgage lender. Because your credit scores are
calculated by analyzing the information in your credit reports, it is
important to make sure that your credit reports contain only accurate
Step # 2 - Carefully Review the Information in Your Credit Reports
A credit report contains three sections:
- Credit Header data meaning your name, present and former addresses,
date of birth, social security number, employer and sometimes a home
- Tradeline section (i.e. list of accounts plus payment history; and
- Inquiries section (i.e. what companies looked at your credit report and why).
Be sure all of the identifying information (i.e. the Credit Header
data) is accurate. Any inaccurate Credit Header data should be
corrected through the reinvestigation/dispute procedure. Even seemingly
innocuous errors, like an incorrect former address, could indicate that
your credit file is in danger of being mixed or merged with another
consumer's credit file. Click here for an explanation of Mixed Files
In the payment history section, determine whether the information
reporting is accurate or not. Usually, the worst information appears
first. This includes public records (such as bankruptcies, judgements,
liens and foreclosures), collections, charge-offs, and late payments
(30, 60, 90, 120 days). Most derogatory information may remain in your
credit file for up to 7 years. Bankruptcies may remain for 10 years,
tax liens forever until paid; then 7 years.
Then the good information appears. Accounts with notations like "pays as agreed" or "never late."
inquiry section is important because it discloses what companies have
pulled your credit report and why. A credit report can be used only for
"permissible purposes" as outlined in the Fair Credit Reporting Act. A
credit report can not be accessed merely to snoop on an adversary or by
a company where you may, at some point, complete an application for
credit. Car dealerships have been particularly notorious for pulling
the credit reports of customers who are merely browsing. Of course, the
salesman wants to quickly determine whether a particular customer is
credit worthy and, thus, whether to invest any time trying to sell him
a car. So the car salesman will pull the window shopper's credit
report. But this illegal.
You should be able to recognize most
of the companies listed in the inquiries section because you will have
authorized the inquiry by, for example, applying for credit at that
company. However, there is a legitimate inquiry known as a "soft
inquiry" that you may not recognize. The most common soft inquiries are
made by banks and credit card companies seeking to pre-qualify
consumers for credit. In addition, existing creditors may legitimately
pull your credit report regularly to determine whether to increase,
decrease or cancel a line of credit or adjust the interest rate. Step # 3 Try to Determine the Cause of the Errors in Your Credit Reports
There are numerous potential causes of errors in credit reports. Some of the more common causes of errors are as follows: Furnisher Errors
– A company, such as a bank, department store, cell phone company or
collection agency, that provides information to a credit reporting
agency that will be included in your credit report is called a
"furnisher." Furnishers sometimes simply provide the credit bureaus
with inaccurate or incomplete information or submit correct information
in bulk using an outdated magnetic format known as Metro-1. Metro-1
does not sync well with the data bases of the credit bureaus. Metro-1
was updated to a newer version called Metro-2. Nevertheless, many
furnishers continue to use Metro-1. Public Records Errors
The credit bureaus hire sub-contractors to cull through public records
for information like judgements, tax liens and bankruptcies. The credit
bureaus are quite proficient at finding this derogatory information and
inserting it into consumer credit reports. But after a tax lien or
judgment has been has been paid-in-full and satisfied or debts
discharged in bankruptcy, this updated information should be reported.
Unless the public records are re-checked, the updated, correct
information will not be included in your credit report. If there is a
public records error in your credit report, then the credit bureau
usually is at fault.Identity Theft
– Please review section on identity theft. Incomplete Files
A credit report may be incomplete because it does not paint a complete
picture of the consumer's credit record and other history. This may
occur when information concerning preliminary actions that reflects
negatively on the consumer is included without any follow up as to an
eventual outcome that is more favorable to the consumer. For example, a
credit report may record that a lawsuit was filed but not that it was
dismissed or may record a debt without showing that it was ultimately
paid-in-full. Mixed Files
mixed file occurs when information from one consumer's report is mixed
or merged with another consumer's report. This can happen when two
people have similar nuggets of personal identifying information. The
credit bureaus do not actually maintain a separate and distinct credit
file for each consumer. A credit report is not assembled until a
company like a lender (called a "subscriber" in Fair Credit Reporting
Act parlance) requests a report. To pull a credit report, the
subscriber must provide the credit bureau with a portion of the
consumer's personal identifying information such as name, address, date
of birth and, from time to time, a social security number. Applying
this identifying data, an algorithm decides which information in the
credit bureau's data base relates to or matches that consumer. This is
the magic moment that the credit report is assembled. Problems arise
when two consumers share a few bits of personal identifying information
because their credit reports will merge. If this happens, then
information from one consumer's report will be included in the other
consumer's report and vice versa.
Step # 4 - Open a File, Document your Disputes in Writing, and
Send First Class Certified Mailings to the Credit Reporting Agencies
and to the Furnisher(s).Dispute in Writing
consumer may lodge a dispute online at the credit reporting agencies
web sites or by placing a telephone call to the credit bureau. But
unless you must meet a time sensitive deadline to delete the inaccurate
information, it is best to do your disputes in writing. Although credit
reporting agencies do sometimes comply with the Fair Credit Reporting
Act by permanently deleting inaccurate information from a credit file
within 30 days from the date that it is disputed if it can not be
verified; you may not be so lucky.
Disputed inaccurate items in
your credit report may not be deleted by the credit bureau. And even if
deleted, these items may re-appear, without notice, in your credit
report sometime in the future. So you should get yourself a file folder
and place copies of all relevant documents--such as letters, dispute
forms, affidavits, receipts, ect.--in the folder. Keep the folder indefinitely
more convenient, there are four down sides to disputing by telephone or
online: 1) it may be difficult to prove months or years hence (say in a
court of law) that the dispute was, in fact, ever made; 2) the precise
date that the dispute was received by the credit reporting agency will
be difficult to prove; 3) supporting documents can not be submitted in
an online or telephone dispute; and 4) due to the latter three
problems, an experienced Fair Credit Reporting Act attorney may be less
likely to file a lawsuit on your behalf should that become necessary.
if you choose to dispute using the internet or telephone because it is
more convenient, then at least get a notebook and create a dispute log.
The log should include the date of your disputes, and describe exactly
what you communicated to the credit bureau. Written Dispute Package Content
– You can either draft a short, concise letter explaining the precise nature of the dispute, such as the sample letter located here
or fill out the dispute form included along with the credit report you
received from the credit reporting agency. The letter or dispute form
must include your name, home address, date of birth, social security
number, the name of the company reporting the inaccurate entry, the
account number for the disputed item, a clear statement that the
reporting is an error (e.g. "This account does not belong to me."), and
a demand that it either be deleted from your credit file or changed to
reflect accurate information. In addition, request that the credit
reporting agency provide you with a statement of the manner in which
the dispute was investigated including identifying all persons and
companies it contacted during its reinvestigation. Be as specific as
possible about what information you want deleted or changed. The credit reporting agencies are required to consider all pertinent supporting documents provided by the consumer
Copies of supporting documents--such as a cancelled check, police
report, fraud affidavit, bankruptcy discharge, or anything else that
tends to prove that the disputed information is inaccurate--should be
included in your "Dispute Package." Keep the receipt from the post
office proving the date of the mailing and staple it, along with the
return receipt when received, to a copy of the letter or dispute form.
Again, put copies of everything in your file folder for use in future
disputes and/or potential litigation. First Class Certified Mailings
All disputes should be sent via certified mail, return receipt
requested. This way, you can track online at www.usps.com the delivery
status of the certified mailing, and confirm when your dispute package
was received. If you have never before sent a certified mailing, then
ask a post office employee for assistance. Once the dispute is
received, the credit reporting agency has certain fixed deadlines to
meet under the Fair Credit Reporting Act in handling your dispute.
Frequently, these deadlines are not met.
Thus explains why it is important to send certified mailings: you
will be able to prove, in a court of law if necessary, when your
dispute(s) were sent and received.
The address used to request
copies of your credit reports from the Big Three are not the same
addresses where disputes must be mailed. Recent addresses for the
dispute departments of the Big Three are listed below. But you really
need to research and confirm on your own at the time of mailing where
to mail the disputes because the dispute department addresses
frequently change. Recent addresses for the Big Three dispute
departments are (were) as follows:
Experian. 701 Experian Parkway, Allen, Texas 75013. The Experian
Parkway address is not the official Experian address, but it should
Equifax. P.O. Box 105891, Atlanta, GA 30374. This is an address that has worked recently. http://www.equifax.com
Trans Union. 1561 E. Orangethorpe Avenue Fullerton, CA 92831 is an address that has worked in the past. http://www.transunion.com/
At the risk of redundancy, check and confirm the addresses as
best you can before mailing a dispute because the addresses and phone
numbers for the Big Three frequently change.
Mail Certified a Copy of the Dispute Package to the Furnisher(s)
a consumer is not legally required under the Fair Credit Reporting Act
to send a copy of the dispute package to the furnisher(s); it is
strongly advised that you do it any way. The furnisher is the
company–such as a credit card company, department store, collection
agency or cell phone company--that furnished to the credit reporting
agency the information that you want deleted or changed. In this
regard, think of the credit bureaus as merely repositories of
information provided to them by furnishers. Typically, after receiving
your dispute, the credit reporting agency will contact the furnisher,
such as a lender, via the automated CDV system explained above. Click here for an explanation CDV system.
The credit reporting agency will reduce the dispute to a two- digit
code, and then transmit the code to the furnisher. In response, the
furnisher will check and see if the information it furnished before has
changed. If it has not, the odds are that the furnisher will "verify"
the accuracy of the disputed item.
In practice, many
furnishers respond to CDVs by simply re-checking the document that
contains the error; that is, the same document that caused the original
erroneous reporting. If the furnisher verifies the accuracy of the
information, then it probably will not be changed or deleted from your
credit report even if the information is, in fact, erroneous.
Furthermore, even if the disputed item is deleted, it may be reinserted
into your credit report by the furnisher in the future unless the
furnisher corrects the error in its own records. Thus explains why you
should send a copy of your dispute package certified first class mail
to the credit bureaus and the furnishers.
It is quite
interesting indeed that a provision in the Fair Credit Reporting Act
unequivocally places the burden on the credit reporting agencies to
send copies of all supporting dispute documents that they receive from
consumers to the applicable furnishers. 15 U.S.C. 1681i(a)(2)(b).
"That federal rule was one of the hard-won pro-consumer
protections hashed out in congressional subcommittee meetings between
industry lobbyists and privacy advocates. It was intended to spur a
process by which the creditor [i.e. furnisher] is compelled to evaluate
the validity of a dispute in a timely manner." Bryan Achoido and Jon
Swartz, Zero Day Threat, The Shocking Truth of How Banks and Credit Bureaus Help Cyber Crooks Steal Your Money and Identity, Sterling Publishing Co. (2008).
Yet after this law went into effect, the credit bureaus simply
chose not to follow it. Why? Because it is more profitable for the Big
Three to ignore this law rather than comply with it. Consequently, like
Bill the Lizard in Alice in Wonderland--who does all of the work for
the White Rabbit-- consumers must do the work that Congress delegated
to the credit reporting agencies; namely, sending copies of their
dispute packages to the furnishers.