How To Dispute Errors On Your Credit Report

Dated: 10/29/2017

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How To Dispute Errors On Your Credit Report

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One of thebiggestobstacles standing between you buying a house or condo in Baton Rouge may be your "creditworthiness".

And, who is it that tells your lender whether or not you are worthy of getting a mortgage? Credit reporting bureaus — known collectively as

The Big 3

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(Experian, Trans Union, and Equifax), are the first to investigate how risky lending money to you may be.

Let’s take quick a look at how the determination is made and, more important, why you should be diligent in checking for mistakes made along the way.

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The Big 3

Whenever you borrow money, whether it’s for a major purchase such as a car or home in Baton Rouge or with revolving credit, such as a charge card, the lender will report your repayment history to The Big 3.

But that’s just the beginning. These agencies also receive information about you from debt collectors and they purchase information from public records, such as tax liens, judgments, and bankruptcies.

*Most, but not all creditors report to all three agencies. Some don’t report to any.

How They Determine Your Credit Worthiness

Equifax, for example, bases 15 percent of its determination on these factors.

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Payment history, however, is the most important factor.

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The Big 3 Are Only Part Of The Story

The three credit reporting agencies report to credit scoring companies, such as FICO®, short for Fair Isaac Corporation. About 90 percent of lenders in the country use a borrower’s FICO® Score when determining whether or not to approve a loan.

FICO® examines each credit report, looking for the following:

  • Payment history – accounts for 35 percent of the credit score

  • Amount of money owedmakes up 30 percent of the credit score

  • Length of credit history15 percent of the credit score

  • New credit and credit mix – each makes up10 percent of the borrower’s credit score

The company then assigns you a credit risk score, from 300 (considered poor) to 850. Borrowers with credit scores of 740 or higher qualify for the lowest mortgage interest rates from the majority of lenders.

Those with scores lower than 620 will find it challenging to obtain a loan and, if they do manage to get approved, will typically pay much higher interest rates.

Everybody Makes Mistakes

Your credit score is only as good as the information supplied to the credit reporting agencies. And, errors are common.

“As many as 42 million Americans have errors on their credit reports,” according to CNN Money

Some of these mistakes are egregious enough to ding the consumers’ credit scores. When you’re getting your finances in order to go after that loan preapproval letter, check your credit reports (from all three agencies) carefully.

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Some of the most common errors, according to the Federal Trade Commission, include:

  • Identity information – Ensure that your name, address and social security number are accurate. “Mixed files,” those that contain information from two consumers with similar names, are common.Image title

  • Accounts – Check each account to ensure that it is truly yours. Identity theft is another common reason for errors in a credit report.

  • Status – Check that the status of each account (open or closed) is listed correctly.

  • Delinquent accounts – Verify that an account listed as delinquent is actually delinquent.

  • Dates – Each account should list when the account was opened, closed and the date of the last payment. Ensure these dates are correct.

  • Double entries – Dispute any debt that is listed more than once, even if they have different account names or different creditor names.

  • Corrected information – If you’ve received a correction to a previous dispute, ensure that the information in the current report remains corrected.

  • Balances and limits – Check all the outstanding balances and credit limits to ensure they’re correct.

Image titleHow To Correct Errors In Your Credit Reports

Each credit report includes information on how to dispute information contained in it.

The dispute process takes time, so start it as soon as you’ve decided to purchase a home.

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Disclosure: May receive compensation from the companies whose products we review. We are independently owned and the opinions expressed here are our own.

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Jeremy Jacob

After collegiate and professional basketball careers, Jeremy knew he wanted to move on to the next chapter of his life; a chapter that involved his passion of meeting and connecting with new people th....

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