By Ann Carrns
Disputing mistakes found on your credit report has become a bit easier because of
expanding electronic options for challenging errors.
The
three major credit bureaus have long provided online channels for
challenging inaccuracies, but some consumer advocates advised against
using that option because the systems didn’t allow for the inclusion of
supporting documents.
That
is changing, however, because the bureaus now offer consumers the
ability to upload documents, like bills you have paid or letters you
have written. (Equifax, for instance, said it added the document upload option in late 2013.)
“Now
that you can upload documents, it allows for a more robust dispute
online,” said Chi Chi Wu, a lawyer with the National Consumer Law
Center. The center previously warned consumers against using the
bureaus’ online dispute systems, but it now says that it can be a viable
option for those who want to have errors removed quickly.
Errors in credit reports
are a problem because they may lower your credit score, the three-digit
number that serves as a summary of your credit history. That can
possibly result in a higher interest rate on a loan or even denial of
credit. A study by the Federal Trade Commission in 2012 found
that about a quarter of consumers had errors in their credit reports. A
smaller proportion — about 5 percent — had errors that could
significantly lower their credit scores, but that still means millions
of people are affected.
Consumer
credit scores are calculated from data in credit reports, which are
provided by the three big credit bureaus: Experian, TransUnion and
Equifax. The reports are compiled using information supplied by lenders
and credit card companies where you hold accounts.
In addition to the bureau systems, at least one online credit management site, Credit Karma, is now promoting a free tool that allows users to dispute some mistakes with a few clicks.
Users
of the site can obtain a free credit report weekly and, if they spot an
error, click a “dispute” button to start a challenge. The site has been
testing the service for months, and it is now making it available to
all users, said Kenneth Lin, the founder and chief executive of Credit
Karma. In testing, he said, the site handled 600,000 disputes, and 87
percent resulted in a change to a member’s credit report.
There
are some caveats. The service currently works only with TransUnion
credit reports. That means you may not catch errors on reports prepared
by Experian or Equifax.
Also,
the site allows challenges only for inaccuracies that don’t typically
require supporting documentation to correct. For errors that require
documentation — like corrections to inaccurate personal information —
users need to contact the bureau directly.
The
site’s services, including the dispute tool, are offered free, but to
use them you must register and provide personal information, including
your Social Security
number. The site has access to your credit report and uses it to make
suggestions about managing your finances, like suggesting a loan with a
lower interest rate. If you choose to apply for such a loan, the site
earns a referral fee from the lender.
Here are some questions and answers about credit reports:
■ How can I check my credit report for errors?
By
law, you are entitled to a free copy of your credit report once a year
from the three main credit bureaus. To get the report, visit www.annualcreditreport.com.
■ What if I want to file a dispute on paper?
The
credit bureau websites provide instructions if you want to go that
route, which consumer advocates still recommend, if you think your
dispute is complex and could potentially result in legal action. (If
that is the case, Ms. Wu advises, use certified mail with a return
receipt option.) The Federal Trade Commission offers sample letters on its website.
■ What if I am unhappy with the result of my dispute?
You can add a note to your credit file. You can also file a complaint with the Consumer Financial Protection Bureau on its website.
Copyright 2015 The New York Times Company. All rights reserved.
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