Buying a Home June 24, 2020

How to Dispute an Error on Your Credit History

Discovering an error on your credit history can be an unpleasant surprise when you’re attempting to get pre-approved for a mortgage. Though most people don’t think about the details of their credit report until the need to secure a loan, it’s an excellent idea to check your report for inaccuracies periodically. Checking your credit reports is easy to do. Each of the nationwide credit reporting companies, Equifax, Experian, and TransUnion, are required to provide you with a free copy of your credit report, at your request, once every 12 months.

What Happens When Your Find an Error?

If you discover an error on your credit report, the recommended way to attempt a correction is through a dispute letter. Dispute letters allow you to request the reporting agency to correct the error. Though it may take a little time to get the errors fixed, cleaning up these mistakes can have a direct (and favorable!) effect on your credit score. Higher credit scores help you secure lower interest rates and better terms on your mortgage.

Here’s what you’ll need to include for each mistake on your credit report that you find:

  1. Refer to which account has the error.
  2. Spell out precisely what is incorrect about the account and reference where it appears in the report.
  3. Outline the requested changes and explain why those changes are necessary.
  4. Include supporting evidence or documentation which will bolster your claim.
  5. Send the letter by certified mail with a return receipt requested so that you can document what the credit reporting company received.

For example: “In my report, the Chase Visa ending in XXXX shows my account is still active. I closed this account in 2012. Please market the account ‘closed’ on the report, not ‘active.’ Included is a letter from Chase bank, confirming the date of the account’s closure.”

It’s a good idea to keep copies of everything you send. Also, be sure to send the correction to all three major reporting agencies (Equifax, Experian, and TransUnion) as well as the original creditor (i.e., the credit card company, utility, etc.). You can find the current dispute mailing addresses on these company’s websites. Federal law mandates that agencies must help you within 30 days. Keep records of your disputes and when/how you communicated with the agencies.

An article by Experian offers insight on credit scores and disputes. Filing a request has no impact on your score. However, once your dispute is processed, that is where your credit score could change. Along with this, updating or changing information such as identification or address information will not affect your credit score.

Why Clean Your Credit

Having the cleanest credit report as possible will result in a higher credit score, which in turn increases your chances of getting pre-approved for a mortgage. A low credit score results in a much higher interest rate when you apply for a home loan. Besides, if you have a low credit score, you will be required to contribute a much larger down payment of cash.

When looking to be pre-approved for a mortgage, you first need to get your credit report as clean as possible, pay off as many debts as you can, and make on-time payments. One of the hands-on things you can do today is set up payment reminders and pay your bills on-time. Take these steps, then sit back and watch your credit score rise!

According to the law, negative credit information stays on your credit report for seven years. On the other hand, positive information can remain on your credit report indefinitely. That is why getting your credit in shape is a crucial step to take when you’re preparing to buy a home.

I help buyers prepare every day! Contact me today. I would love to help you buy your next home, (928) 916-1921.