A Six-Step Guide To Fixing Your Credit Report

So you finally heeded the advice of the experts and ordered a copy of your credit report only to discover a major error. Don't despair. Bankrate.com writer Cheryl Allebrand offers this step-by-step guide to fixing mistakes in your credit report:

Step 1: Gather your back-up materials. You already make a habit of holding on to financial records of everything likely to appear on your credit report for the next seven years, right? Good, because in order to set the record straight you'll have to prove your case. This will require providing the agency that compiled the report with copies of billing statements, payment records and any other documentation that supports your claim.

Step 2: Contact the credit-reporting agency. Once you've collected your evidence, you'll need to contact the credit reporting agency. (It will be one of three: Experian, TransUnion or Equifax.) The best way to do this is to send a letter of dispute via certified mail. Be as detailed as possible, but make sure the letter is no longer than one page. After the agency receives your letter, it is legally required to notify the other credit-reporting agencies, launch an investigation and contact the creditor who made the initial report.

Step 3: Contact the creditor. To expedite the process, go one step further and send a letter of dispute directly to the creditor who reported the error. If you choose to talk to a customer-service representative on the phone instead, don't assume that the situation has been resolved. Always ask the creditor to send you a letter describing the actions it has taken.

Step 4: Keep records of everything. It's important to keep a file of all payment records, receipts and billing statements relating to the error, along with copies of any letters you've sent to, or received from, the crediting-reporting agency and creditor.

Step 5: Follow up after 30 days. Once the agency receives your letter alerting it of the error, the creditor has 30 days to either verify or dispute the information. If the matter hasn't been resolved within this time, follow up with the credit-reporting agency. After the matter has been resolved, you are entitled to order another free credit report to ensure the changes have been made.

Step 6: If you can't resolve the situation, contact an attorney. If you've sent a letter of dispute and provided the credit-reporting agency with all of the available documentation and the error still hasn't been fixed, consider hiring a lawyer. Many of them are willing to take this type of case on a contingency basis, which means you pay only if you win the case, because the Fair Credit Reporting Act has a lawyer fee written in.

To learn more about your rights, visit the Federal Trade Commission's Web site: http://www.ftc.gov/credit.