It's one thing to have late payments or delinquencies on your credit report. Everybody has forgotten a payment or two. But it's quite different when somebody else's mistakes cause "dings" on your report.

Fixing such errors is important because unfavorable information on your credit report-accurate or not-affects your ability to borrow money.

The three major credit bureaus-Equifax, Experian, and Trans Union-compile information about you into a report that businesses use to evaluate whether you'd make a good borrower or, in some cases, a good employee. Credit reports tell people where you live, how you pay your bills, whether you've filed for bankruptcy and if you've been arrested.

Let's say you made your monthly payment on your department store credit card on time, but for some reason it is reported as a late payment on your credit report. According to the Fair Credit Reporting Act, both the credit bureau and the department store are responsible for correcting mistakes or incomplete information on your report. But you have to let them know.

Step By Step
To correct an error, write a letter to the credit bureau that produced the erroneous report. Be sure to:

• Provide your complete name and address, stating each item in your credit report that you believe is a mistake and why. Stick to the facts and request that errors be corrected or deleted.
• Include copies-not the originals-of documents that back your claim such as a canceled check or a receipt of payment. Enclose a copy of the credit report and circle items in question.

Next, write a letter to the company or lender where the mistake came from, informing them of your dispute. Remember, include copies of documents that back your claim.

Send both letters by certified mail, return receipt requested, and keep copies for your records. This way you have proof both parties received notice of your dispute.

Credit Bureau Response
The credit bureau must investigate items in question within 30 days (unless they find your dispute is frivolous). They will also forward your dispute to the department store, which must investigate your claim and report back to the credit provider.

If the department store or any other creditor agree there is a mistake, they must notify the other credit bureaus so they can correct the information in their files. If the disputed item cannot be verified, it must be deleted from your files.

When the investigation is done, the credit bureau must give you its results in writing as well as a free copy of your credit report. You can also request that correction notices be sent to anyone having received your report in the prior six months.

Statement of Dispute
If the credit bureau does not resolve your dispute, you can ask them to include a statement (up to 100 words) in your file that says you disputed information in your report. The statement will show up in future credit reports.

If you're not satisfied with how the credit bureau handled your dispute, you can file a complaint with the Federal Trade Commission's Consumer Response Center by phone (877-FTC-HELP) or on the Web.

Rooting out mistakes in your credit report takes time and diligence. But your efforts could make the difference when it's time for you to get the loan terms you want.

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