Your credit report is the one part of your financial identity that can affect and profoundly influence your quality of life.
So you may be surprised to learn that credit reports (including yours) often come with errors.
In fact, it's a lot more common than you might think.
Though most Americans use credit, few of us know how to pull our credit report, and even fewer know how to fix any problems that we do find.
Mistakes on a credit report can lead to a lower credit score.
Lower credit scores can lead to missed financial opportunities, like taking out a new loan to start the business of your dreams or a mortgage to finally settle down in a home of your own.
In fact, more than one in five consumers have errors on their credit reports.
To make matters worse, very few Americans know how to read their own report.
If you follow the right steps, though, you can learn to become credit-savvy and take your credit score into your own hands.
This can help you secure great terms for loans, get better credit cards, and possibly save money on interest and insurance premiums.
Even if you've never looked at your credit report before, we're going to guide you step-by-step and show you how easy it is to get started.
All you need to do is to follow this helpful guide, and soon you'll be on your way to mastering how to pull your report with ease and confidence!
Then you can start disputing any errors you find that are keeping you from having a solid financial reputation you deserve and one that creditors can see!
How Errors Impact Your Credit Report
Credit reports are used to calculate scores, but some data may be wrong
Your credit report reflects how responsible you are with borrowed money (i.e. credit), whether it's loans, credit cards, or anything else you'll eventually need to pay back.
That's what makes it one of the most important parts of your financial identity!
Your credit report is exactly what it sounds like—a report detailing every purchase you've ever made with a credit card and every loan payment you've ever made, as well as your mortgage history.
All credit reporting is produced by the three big credit bureaus: Experian, TransUnion, and Equifax.
Credit bureaus are big, professional financial institutions with thousands upon thousands of employees constantly checking every credit report they produce to make sure they're completely free of errors, right?
Well, not exactly.
Credit bureaus are huge businesses that produce credit reports, but the bigger the business, the more people they serve (i.e. the more chances for error).
That's why it's important to understand just what your credit report is and how it's used because no one's going to do a better job at keeping it clean than you.
Credit repair largely falls on our shoulders as consumers.
Credit reports are a record of your individual credit history. Every time you've ever swiped plastic, paid back a loan, or missed a payment, that all gets reported by way of creditors to the three major credit bureaus and compiled in a report.
Credit reports get pulled whenever you apply for a line of credit or a loan. When you sign up for a shiny new card, the credit card company wants to know what they can expect from you as a borrower, and that's what credit reports are for!
To make sure you are the type of person that makes payments and meets deadlines, creditors will pull your report and look at your history.
If it all looks good, you'll probably get approved.
If not—well, that's why it's important to have a clean report!
When your credit gets pulled, it will either be a hard pull or a soft pull. Usually, if your credit report is the deciding factor in an application, you can expect the pull to be a hard pull, and these will ding your overall credit score just a bit.
Otherwise, the pull will be a soft pull, which shouldn't have any effect on your overall credit score.
When you go to pull your own report, it will be counted as a soft pull, so no need to worry!
A bad credit score can cause high premiums and keep you from securing loans. The reason all this is important is because bad reports lead to bad scores, and bad scores lead to bad credit cards, denied applications, high interest rates, and high insurance premiums.
After determining your trustworthiness as a borrower, the person lending you their money (i.e. the creditor) will determine just what sort of treatment you get, and it all depends on the number on your report.
How to Pull a Credit Report
You can request yours once per year for free
If you've never done it before, pulling and reading a credit report can seem intimidating, but it really can be easy and free!
When it comes to actually checking your credit report, you have plenty of options.
The most important one to look at first is your annual free request.
You have the right to check your credit report for free, yearly. Under federal law, you can request your credit report from each of the three big bureaus directly by going to annualcreditreport.com.
Of course, a lot can happen in a year, so one strategy is to request a credit report from a different bureau every four months via the website above, that way you're kept up to date more than just once a year.
Another way to use your free annual pull is to request your report a few months before applying to take out any major loans—that way, you know where you stand, and you can better prepare before applying.
You can also request your credit reports directly from the bureaus, for a fee. This can be done directly from each bureau's respective website.
Even still, the bureau Experian offers you a free look at your credit report once a month, and there are other services and apps that offer a peek at your credit score as well.
The takeaway here is that you have to make sure you're using the options that work best with your situation.
How to Dispute a Credit Report
Check for inaccurate data, fraud, or other errors
Now that you've pulled your credit report, it's time to find what's wrong with it and dispute it.
Remember, the goal here is getting a credit score that's going to get you the ideal treatment from lenders, so make sure you keep that in mind if the going ever gets tough during the dispute process!
With credit reports, all sorts of errors can pop up, but the key here is knowing what to look for before you take any complaints to the bureaus.
A credit report is a reflection of your credit history, so there shouldn't be anything there that isn't actually a part of your history as someone who's used a line of credit before.
Your account information may be mixed with someone else's, or simply be incorrect. For example, if you share a name with someone else, like so many John Smiths do, it's possible some of your data will become mixed at some point.
Now you might think, that might not be such a bad thing for you if your "credit-doppelgänger" is an excellent user of credit, but what if he or she often falls behind on payments?
The last thing you want is to pay for the mistakes of someone you've never even met!
Likewise, some accounts will appear open despite being closed, show an incorrect balance, or possibly list you as the owner when you are simply an authorized user.
In short, your report may fail to reflect any new developments in your accounts' history—and that can count against you.
Personal information linked to an account can sometimes be inaccurate. If you find your errors coming from a mix-up with others, this could be part of the reason why.
Often times, details linked to an account can contain incorrect personal information, like a Social Security number that's a few digits off, or a date of birth a few years before you were born.
Issues like these might not directly affect your credit score, but they can cause problems down the line that lead to mix-ups and other errors.
Your credit score is intimately tied to your financial history, so you want to make sure it's actually your personal information that's attached to it.
Credit fraud and identity theft can leave a mark on your credit report. Identity theft is incredibly common, with 15.4 million Americans reported to be victims of it in one way or another back in 2016.
Sadly, those numbers haven't gone down since then.
Even if you've received a chargeback from your credit card company after being a victim of credit fraud, the mark on your account may have already slipped onto your report.
You shouldn't have to be the one to suffer if someone else stole some confidential information from you—but identity theft has become rampant in the age of the computer.
That's why it's necessary to check your reports as often as reasonably possible.
Occasionally payments will get posted to the wrong accounts. When this happens, creditors may claim that you have missed a payment you made or made a payment on a loan you never even took out!
This is especially common if you've had debt in the past.
If the debt goes unpaid for a certain amount of time, your lender may have sold it to another debt collector who handles and processes multiple debt accounts en masse.
When debt is passed around like this, the likelihood of errors arising goes up, and these errors can be dangerous.
If credit repair is your goal, the last thing you need is credit reporting agencies thinking you have a mountain of late payments thanks to debt that's being passed around too quick to properly keep track of.
Not only will it hurt your credit score, it will make it seem like you owed or still owe money on an account you never knew of—and some debt collectors might try to cash in on those kinds of mistakes.
Always be vigilant with your credit.
Naturally, missed payments don't look good, so the last thing you want is a payment history filled with missed payments and other mistakes you've never made.
Now, once you've found all these mistakes, it's time to dispute them!
To dispute the errors in your report, contact the bureaus directly
After you have pulled and checked your report, it's time to dispute the mistakes you've found.
Getting disputes approved can be quite easy since it's less hassle for credit bureaus to agree with consumers in the long run.
Even still, it's smart to gather as much evidence as you can before disputing.
It's always good to have evidence showing your credit report is inaccurate in some way. This can be anything from printouts of bank activity to show you've made payments to statements acknowledging that an account has been closed.
Contact the credit bureau directly to dispute the error. You can dispute any mistakes by letter, phone, or directly via each credit bureau's website.
If you are disputing items such as fraud, you may need to submit a letter or talk with a representative on the phone.
Likewise, not all disputes can be handled by phone, and some will require you to send in a letter or use the bureaus' websites.
The main point here is to keep any dispute letters brief and specific, otherwise, the credit bureau may have to ignore your claim.
If you are disputing errors on your report via the internet, you can do so any day of the week.
But, once submitted, don't expect everything to happen overnight!
Make sure most disputes are kept separate. For the sake of time, it might seem like a better idea to put all the disputes on one page.
Not only does this make the letter seem more vague, it also lowers your chances of getting a dispute approved.
Keeping them separate makes everything clearer and more efficient, even if it can be more tedious to put together.
Credit disputes can take up to 30 days before being acknowledged, and 60 to be corrected. Don't give up hope though, at this point most of the legwork is over—now you just have to stay on top of your mail for updates.
Make sure the error is fixed, and if not, get the government involved
Unfortunately, there's not a lot of hand-holding in the world of credit reports.
You were on your own checking for any errors and you're largely on your own getting them fixed.
So, make sure you got the result you were looking for and that the error was and stays fixed.
The last thing you want is to go take out a loan and see that your score didn't jump up nearly as much as you thought it would because a pesky error came back.
Sure, it's possible to get a loan with bad credit, but it won't be half as good as what you could get with a little diligence!
Check in with the credit bureaus as often as possible. When it comes to your credit report, it helps to be a nag.
Make sure recent credit pulls are updated with your new report. The credit bureaus are required to send a notice of all corrections to anyone who pulled your credit in the past six months.
You yourself are allowed to send a corrected copy of the report to anyone who made a pull on your behalf over the past two years, for employment purposes.
You can involve the government by filing a complaint with the FTC. If you feel the credit bureau isn't acting upon your request or isn't treating your complaint seriously, you are within your rights to report the bureau to the Federal Trade Commission.
You can re-dispute an error within 15 days of the original decision. Simply gather up any additional evidence that proves your case and send it enclosed with a letter explaining what the documents are.
Make sure each time you submit evidence, you're only sending copies—you want to keep the original documents for your own records.
If you need to resubmit the dispute, you'll need to use those original documents as evidence again!
You can also go directly to your creditor and request them to remove any errors. This won't work for every issue, but especially for those that are the fault of the creditor, this may be a good choice if the bureaus won't budge.
Always follow up a few months to a year later, with all three bureaus. Even if the errors have been removed, there's always a possibility they will come back, right where they were before, and maybe in larger numbers!
That's why it's so important to make credit monitoring a habit.
And since your credit report with each bureau will look a little different, make sure you aren't just dealing with one and not the other two.
You'll need to handle each bureau separately.
And while it might seem tedious, clearing any errors now will save you from a ton of headaches later.
There's plenty of things you can do to improve your credit score right away, but getting your credit report error-free is a crucial part of having a sturdier foundation for your finances.
Your credit report is an important part of your financial identity, and it's time to make it error-free
Filing a credit dispute might not be the most enjoyable way to spend your free time.
But without an error-free report, you might be missing out on credit card and loan opportunities, as well as paying too much for insurance and in interest.
By regularly pulling and monitoring your credit reports closely, you can catch the errors that might be weighing you down or keeping you from having the credit score you deserve.
After catching all the errors on your report, you're now ready to take them to the three big credit bureaus and start disputing your way to a more financially sound future.
For almost 20 years, through CardGuru, I've made a career out of teaching consumers the ins and outs of a wide range of financial topics while providing them the tools and solutions they need to manage their finances.
That's why I hope this guide will help and inspire you to take the first of many steps on your journey of credit repair to attain the credit score you've always wanted to have!
Have you taken any of these steps to a cleaner credit report before?
What worked best for you?
What mistakes would you avoid if you had to do it again?
Let us know in the comments below!