If you’re preparing to buy a new home, what’s in your credit report can make all the difference. Even if all of your other information is stellar, such as your income to debt ratio or a high down payment, a negative credit report can cost you thousands of dollars in interest or even the ability to get into the house you want. Fixing errors in your credit report before you buy your new home is essential if you want to get the best possible deal.
Under federal law, the credit reporting agencies are responsible for correcting any errors in your credit report. Unfortunately, the burden of proof is usually on you when it comes to convincing the agency that there is an error to begin with.
Start by contacting the credit reporting company. Tell them, in writing, what the error is. Provide copies of any documentation you have that might support the claim. Make sure the letter includes your contact information, including your address. The letter should identify each item you intend to dispute. Provide the credit reporting agency with all of the facts, tell them why you believe it is in error and ask that they remove or correct the information. It may be useful to include a copy of your credit report with the disputed items highlighted.
The credit reporting company will then perform an investigation. This usually occurs within 30 days. They will contact the organization or company that provided them with the inaccurate information, and allow that company to respond with proof that the information is accurate. once the credit reporting company has all the information, it will make a decision. If they determine that you’re correct and that there is an error in your credit report, they are required to notify all of the three credit reporting agencies.
In some cases, this dispute may not be found in your favor. If that’s the case, you can continue to dispute the item by contacting the company that made the erroneous report. If necessary, you can take them to court to try to correct the error. You’re probably looking at more of a protracted battle, however, and it’s likely you may want to proceed with buying your new home before the dispute is resolved.
If you continue to fight to correct the error, make sure you have all of your ducks in a row. Keep all of the correspondence you have with the credit reporting agency or with the company that has reported the incorrect information. Keep all of your original documentation. If you must send something to someone, make a copy and keep the original for yourself.
Above all, try to stay calm and professional. In most cases, an error on your credit report isn’t personal. It’s most often due to a clerical error at the reporting company. By keeping a professional demeanor at all times you help protect yourself, and you reduce the risk that a court (if it goes to court) will find against you.
If you are able to fix your credit report before you buy a new home, it will pay off for years to come in the form of a lower payment and a better home.
