Your credit report is one of the most significant components of your financial picture. Not only can it affect whether you get loans to buy big ticket items that you can't pay cash for, such as your house or car, but even if you do get a loan, a bad credit rating can force you to pay a much higher interest rate. In addition, a bad credit report can prevent you from getting some jobs, particularly in industries where handling money or other assets is common and having trustworthy employees is considered a must.

Getting Credit Report

In 1970, Congress passed the Fair Credit Reporting Act (FCRA) to encourage consumer credit reporting companies to ensure that their credit reports are accurate and protect the privacy of the nation's consumers. The FCRA tasks the Federal Trade Commission (FTC) with enforcing the law, which has now been amended to require each of the three major consumer credit reporting companies--Equifax, Experian, and TransUnion--to make free credit reports available to consumers once every 12 months upon request. To get a free report, go to the FTC website to fill out an application. If you'd rather call, the FTC website has the toll-free number to request an application, and it also has the address to which to mail an application if you'd rather request your free report that way. You can also order a free report, even if it hasn't been 12 months since you received your last one, if a credit company takes adverse action against you.

Correcting Credit Report

Once you've received your credit report, if you think there is erroneous information in it, you can write a letter to the consumer credit reporting company stating your name and address and the item(s) you're disputing. State the facts as to why you're disputing the item(s), and include with the letter copies of any documentation supporting your claim, such as paid receipts for the disputed items if you have them. Also request in your letter that the disputed item(s) be removed or corrected. Once you've contacted the credit reporting company, it has 30 days to investigate, and must in turn provide your information to the creditor that originated the adverse information for the creditor to investigate. When the investigation is complete, the consumer credit company must provide you with the results, including another free credit report if your dispute resulted in item(s) being changed or deleted. The company can no longer include any disputed items in your report unless the creditor provides proof that it's justified. Even if your dispute doesn't result in items being removed or changed, you can still request that the credit reporting company include a copy of your dispute letter in the report file for other potential creditors to read.

Correcting Record With Creditor

Also write a letter to the creditor who originated the adverse information, including the same information as your letter to the reporting company: your name and address, why you believe the information is wrong, any facts supporting your dispute and copies of any documentation you might have to support your claim. Once you have written a letter disputing your credit information to the creditor, the creditor must notify the credit reporting agency of the dispute, and if you're found to be correct, the creditor must erase the adverse information from your file and not report it to a credit reporting agency again.

Source:

FTC.gov: How to Credit Report Errors