How to Dispute Credit Report Errors Effectively

When was the last time you looked at your credit report? Did you see inaccurate information and disregard it because it 'didn't seem like a big deal?' Think again; this inaccurate information on your credit report may be costing you thousands of dollars. If your credit report contains errors, you may need to dispute them. By effectively disputing credit report errors, you can improve your credit score by tens or hundreds of points and qualify for lower-rate credit cards, auto loans and mortgages. How do you get started?

First, get a copy of your credit report.
You can't dispute errors until you know what's contained on your credit report. Under federal law, everyone is entitled to receive one free credit report per year from the Annual Credit Report Service. Additionally, if you're denied credit or denied a job based on your credit, you are entitled to receive a copy of your credit report from the reporting agency within 60 days. Don't neglect your credit report; request it annually, at the very least, to check for incorrect information on your credit report and dispute credit report information when necessary.

Check your credit report for personal information errors.
In today's society, where increasing worry of identity theft has tightened credit security, some creditors require you to verify personal information contained on your credit report before issuing credit. Therefore, it's important to ensure that all of the personal information listed is correct. Make special note of current and former addresses, as this information is can be difficult for credit bureaus to track and is frequently reported incorrectly. If any of the personal information is incorrect, notify the reporting bureau and request to have it updated.

Look for the most common credit account errors.
Some of the easiest errors to spot are missing or incorrectly reported accounts. If one or several of your credit accounts are missing from your report, you may not have enough available credit information for creditors to make informed decisions about you. If the missing accounts are accounts in good standing with low balances, their absence may cause a lower credit score. Adding those good accounts could boost your score immediately.

In addition to missing credit accounts, look at account type. Incorrectly reported credit account type is another thing that can lower your credit score. Revolving lines of credit, such as credit cards, and installation accounts, such as home and auto loans, are very distinct types of credit. Your use of each type of account gives a lender a lot of information about you as a borrower. If your accounts are listed incorrectly, lenders don't have a complete picture of your borrowing and repayment habits. Make sure you correct this oversight to maximize your credit score.

Go over your credit report with a fine-tooth comb.
After you've addressed credit account information, look at balance and limit information. This is an especially important area because lenders use your balance information to determine whether you're a good or a bad risk. Creditors want to see your credit balances at or below 25-30% of your total available credit. If you have a $1,000 limit on your card and you're carrying a balance of $800, your credit score may go down and a lender may assume that you're spending above your income to carry such a high debt ratio. If your credit limit on that card has gone up to $2,000 and you've paid the card down to $300, your credit score should go up and creditors would be comfortable with your spending habits. However, if a credit bureau is using old data, and your updated credit information isn't reflected - you're still stuck under the 'old information' scenario, even though it may have been months since your credit limit and balance information has changed. It's especially important to dispute credit report information that's out-of-date to ensure that your credit score is at its highest.

What's a DOLA, and why does it matter?
DOLA is the abbreviation for Date of Last Activity. This is another key area to watch on your credit report. The DOLA tells creditors when the last date was of a delinquent payment. If your creditors are incorrectly reporting the DOLA, it can damage your credit score. If you have an incorrect DOLA, your potential creditors may think you've been delinquent more recently than you actually have, which could cause them to deny your request for credit. If your credit report contains an incorrect DOLA, you can often get the item deleted entirely due to incorrect reporting.

Don't just ignore incorrect information on your credit report - dispute credit report error.
Finding the incorrect information on your credit report is only half the battle. To ensure that your credit score isn't damaged unduly by credit report errors, it may be necessary to argue credit report details with the reporting agencies. If you want to learn about other types of errors that may be costing you points on your credit score, sign up for our free credit secrets newsletter. If you want to learn how to write an effective credit report dispute letter, check out the Credit Secrets Bible.