Step Two: Take Action To Correct Your Credit Report

By Federal Law (The Fair Credit Reporting Act as amended by the Fair and Accurate Credit Transactions Act or "FACTA"), Credit Reporting Agencies (CRAs) must take action to correct errors you point out to them, if you do so in the correct manner.

• First, get your report from the CRA in question. You must be able to show them the error or disputed item on that CRA's report. Telling a CRA that a lender told you about an error is not the same thing.
• Second, write a letter telling the CRA and the creditor why the information is wrong or too old to be reported. Be specific.
• Attach some form of proof of why the item is wrong. For instance, copies of your bankruptcy discharge papers showing that a creditor was included in your bankruptcy, or an old credit report showing negative information reported on the same debt, but by a prior holder of that debt.
• Send copies of your letter, the pertinent part of the CRA's report and your proof to the CRA and the creditor by certified mail, return receipt requested. This will cost a bit more in postage, but you will get cards in the mail, signed by an employee of the CRA and creditor, proving that the CRA and creditor did receive your letters and when.
• The CRA has 30 to 45 days to investigate your claim and must then respond to you. It's best to copy the creditor so that the creditor cannot later claim ignorance and report incorrect information again.
• The three main CRAs, Experian, TransUnion and Equifax, have information on their web sites on how to dispute items on your report. They also provide an on-line dispute method. Remember to keep everything in writing and copy the creditor. Avoid purchasing services on the three CRA's web sites since they are expensive and usually unnecessary. You are entitled to one free credit report per year from each of the three CRAs, but only through the "central source" at www.annualcreditreport.com. (There are some companies that call themselves "free" but are not). If you think you're at risk for fraud or identity theft, you can have a freeze put on your credit file.

If you cannot resolve a dispute, you are entitled to add a "personal statement" of up to 100 words. This statement must appear on your credit report until the dispute is resolved.