What Happens When You Deny Items on Your Credit Report?

TransUnion, Experian and Equifax are national credit bureaus that collect data on consumer credit accounts from banks, loan companies and similar firms. The three bureaus list and sell these data in credit reports, which lenders use to evaluate credit applications and the potential risk of opening new credit accounts. Although the credit bureaus initially compile credit reports without consumer input, consumers do have the right to challenge the items listed in their reports.

Reviewing Credit Reports

Federal law gives consumers the right to review each of their credit reports once a year at no cost. The Federal Trade Commission (FTC) explains that these free annual reports are available through AnnualCreditReport.com (see Resources), which allows online and telephone orders. Each bureau must provide its own annual report, because their information sometimes differs. Mistakes may appear on multiple reports, or just one.

Types of Errors

Dayana Yochim of the Motley Fool money management site warns that payment dates on credit reports are often wrong, which can make on-time transactions look delinquent, or late payments look worse than they really are. Also, banks sometimes report incorrect account balances and credit limits, which can harm your credit rating if the ratio between owed amounts and available credit reduces your score. Some items listed on a credit report may belong to a different person entirely.

Process

To deny credit report items, you must contact each credit bureau that is reporting incorrect information. The FTC recommends sending each bureau a registered letter that lists the disputed entries, and the reasons for your denial of those entries. You should attach copies of canceled checks, money order receipts, credit card and loan statements, and any other paperwork that supports your claim that the items in question are incorrect. The bureaus have postal addresses on their websites.

Results

The FTC explains that the credit bureaus must investigate denials within a reasonable time, which is usually 30 days. The bureaus generally send responses within 45 days, after trying to confirm the disputed data with the original creditor. If the creditor does not confirm the data within the legal time frame, the credit bureau will erase the disputed item from your credit report. When this happens, the bureau will send you an updated credit reports that includes the correction.

Considerations

Creditors sometimes disagree with consumer denials, and will verify the data with the credit bureau. The data will remain on the credit report if it is validated to the bureau's satisfaction. However, consumers can still make their denials an official part of their records by providing an explanatory statement of up to 100 words to TransUnion, Experian and Equifax. Each bureau must add the statement to the consumer's credit report, and provide it whenever lenders request a copy of the report.