Credit reports, credit cards, mortgages and more…

The last edition of this blog covered the serious impact that having a poor credit score can have on your life. It’s not just a question of being denied the best mortgage and credit card rates, or having to pay more for rent, utilities and insurance. Many employers check the credit reports of those they’re thinking of hiring or promoting. And, if you have a security clearance, that too could be downgraded if your credit history has taken a battering.

You can put all these consequences down to tough luck when someone’s report has taken a hit as a result of unwise credit card use, poor investment decisions or even — if you’re feeling uncharitable — illness or unemployment. But last month CBS MoneyWatch reported that more than half of all credit reports in this country (some experts estimate 70 percent) contain one or more errors.

Check your credit report

No wonder CBS’s Ray Martin says:

My advice to folks: get a copy of your credit report and review it NOW. If you notice an error when you are applying for a loan or a job, then it is too late. You won’t get the error fixed before they see your report and that error could end up costing you big time.

If you haven’t looked at your report recently, you’re entitled to receive one free copy a year from each of the main credit bureaus. Services such as the following can also provide continuing monitoring:

• Equifax Credit Watch Gold With Score Power

• Smart Credit

• Transunion – 3 Bureau Credit Monitoring

Credit report error correction can be difficult

You have a legal right to have any errors in your credit report corrected. But enforcing that right isn’t as easy as it sounds, and credit bureaus are routinely sued by consumers who have tried every other route to sorting out a legitimate problem, and failed.

You can lessen — but not entirely eliminate — the chances of having to file suit by following these five golden rules:

• Don’t expect the credit bureau to play fair. It’s paid by the people (credit card companies, other lenders, collection agencies and so on) who originally supplied the wrong information; not you.

• Don’t use a credit bureau’s online dispute resolution service.

• Put everything in writing, keep copies, and always use certified mail, return receipt requested.

• Don’t get mad in your letters. A judge may one day read them, and you need to appear reasonable and measured.

• Always provide supporting evidence (copies of credit card statements, police reports, court judgments and so on) for any claim you make in a letter.

The last resort

Very few people enjoy suing others, especially when the others are big, powerful corporations, but if you’ve done everything you can to get a genuine mistake on your credit report corrected, and have been unsuccessful, you probably should consider consulting an attorney. Look out for one who:

• Is used to representing consumers

• Has a track record of litigating under the Fair Credit Reporting Act

• Doesn’t charge for an initial consultation

• Is prepared to take your case on a contingency basis, which means it should cost you nothing unless you win

Acknowledgment

Much of the information in this blog came from one such attorney, John G. Watts of the Watts Law Group, Birmingham, Alabama (www.alabamaconsumer.com).

Published 10/11/10 (Modified 06/26/14)