How To Dispute Errors On Your Credit Report

The Andrea Fonash Group of RE/MAX Action Associates
Published on October 22, 2017

How To Dispute Errors On Your Credit Report

One of the biggest obstacles standing between you and buying that West Chester house or condo may be your credit score.

Who tells your Chester County mortgage lender whether or not you are worthy of getting a mortgage? Credit reporting bureaus are the first to investigate how risky lending money to you may be.

The big 3 credit reporting bureaus are Experian, Trans Union, and Equifax. Let’s take a look at how they determine your credit score and, more importantly, why you should be diligent in checking for mistakes.


Credit Cards.

The Big 3

Whenever you borrow money, the lender will report your repayment history to the Big 3. That’s true whether you borrow for a major purchase—like buying real estate in West Chester—and when you buy smaller stuff with a credit card.

But that’s just the beginning. These agencies also receive information about you from debt collectors (if applicable). And they collect public records, like tax liens, judgments, and bankruptcy filings.

Most creditors report to all three agencies. Some report to certain agencies. Some don’t report to any.


Ecommerce Credit Card.

How They Determine Your Credit Worthiness

Each of the 3 agencies “has its own model for evaluating the information in your credit report and assigning you a credit score,” according to the experts at Equifax. This is why your score may be different with each agency.

A big chunk of your credit score is determined by the types of credit accounts you have and how many you have. Equifax, for example, bases 15% of its determination on these factors.

But the MOST important factor is always payment history.


Accounting Sheet.

The Big 3 Are Only Part Of The Story

The 3 credit reporting agencies report to credit scoring companies, such as FICO®, short for Fair Isaac Corporation. About 90% of lenders in the country use a borrower’s FICO® Score when determining whether or not to approve a loan.

FICO® examines each credit report, looking for the following:

  • Payment history – 35% of your credit score
  • Amount of money owed – 30% of your credit score
  • Length of credit history – 15% of your credit score
  • New credit – 10% your credit score
  • Credit mix – 10% your credit score

The company then assigns you a credit risk score, from 300 (considered poor) to 850 (excellent). Borrowers with credit scores of 740 or higher qualify for the lowest mortgage interest rates from the majority of lenders.

Those with scores lower than 620 will find it challenging to obtain a loan and, if they do manage to get approved, will typically pay much higher interest rates.


Credit Card, Black & White.

Everybody Makes Mistakes

Your credit score is only as good as the information supplied to the credit reporting agencies. And, errors are common.

“As many as 42 million Americans have errors on their credit reports,” according to CNN Money.

Some of these mistakes are egregious enough to hurt the consumers’ credit scores. When you’re getting your finances in order to go after that loan pre-approval letter, check your credit reports from all 3 agencies carefully.

Some of the most common errors, according to the Federal Trade Commission, include:

  • Identity information – Ensure that your name, address and social security number are accurate. “Mixed files,” those that contain information from two consumers with similar names, are common.
  • Accounts – Check each account to ensure that it is truly yours. Identity theft is another common reason for errors in a credit report.
  • Status – Check that the status of each account (open or closed) is listed correctly.
  • Delinquent accounts – Verify that an account listed as delinquent is actually delinquent.
  • Dates – Each account should list when the account was opened, closed and the date of the last payment. Ensure these dates are correct.
  • Double entries – Dispute any debt that is listed more than once, even if they have different account names or different creditor names.
  • Corrected information – If you’ve received a correction to a previous dispute, ensure that the information in the current report remains corrected.
  • Balances and limits – Check all the outstanding balances and credit limits to ensure they’re correct.


Credit Card Security.

How To Correct Errors In Your Credit Reports

Each credit report includes information on how to dispute information contained in it.

The dispute process takes time, so start it as soon as you’ve decided to purchase a home.