If you suddenly find that the credit score earned by you has dropped due to no reason, help is at hand. The Consumer Financial Protection Bureau (CFPB) has compelled the three credit reporting companies - TransUnion, Equifax (NYSE: EFX) and Experian to initiate a new system which makes it simpler to correct the mistakes made on credit reports.
Old, hard times
Under the previous rules, complainants were required to submit the paperwork to credit reporting company. After its acceptance, the credit reporting company would give its unique code and then transmit the code to a creditor. Every credit reporting agency would need to display all the important documents sent by you to the creditor so that mistakes could be fixed by the creditor with all the three companies. According to Bill Hardekopf, Chief Executive Officer, LowCards.com, the previous system was like interacting with a “brick wall." The present arrangements give the consumer an additional clout.
The credit reporting agencies together got about eight million complaints regarding incorrectness in the reports in 2011. A study by the government revealed that approximately 42 million US residents have mistakes on their credit reports. About 20 million errors come up in the important categories (like “partial matches” where credit company mixes up individuals with similar information). In 2013, it was been reported by the New York Times that credit bureaus frequently consider these notable mistakes as a component of the business, which result in them resolving all disputes with their consumers outside the legal domain.
In case you have found an error in your credit report, you need to follow a few particular steps to settle it with your credit agency. The first thing you need to do is to review the credit report. You are supposed to receive a free credit report at a 12-month interval from Experian, TransUnion and Equifax. It is suggested that you pull a report every four months.
The second step is to collect all documentation that supports the claim. When you submit the documents, do not forget to highlight errors on the credit report. The third step is to write a dispute letter and make copies of all documentation.
After you have completed the documentation, do send the letter and all enclosures through certified mail. This is preferable compared to sending the documents online. Do ask for a receipt. You should follow up with your credit bureau after 30 days. If you are successful in the dispute, the credit company must notify all the three credit bureaus about it.