Avoiding and Correcting Mistakes

The best way to maintain your credit standing is to repay your debts on time. But there may still be complications. To protect your credit and to save your time, your money and your future credit rating, you should learn how to correct the mistakes and misunderstandings that may tangle your credit accounts. If there is a snag, first try to deal directly with the creditor. The credit laws can help you settle your complaints.

Warning A lot can go wrong with a credit card, even if you stay within your limits and pay promptly. It makes sense to keep your receipts and match them against your monthly statement. This will help you spot errors or unauthorized charges.

Incorrect information in your credit file. Credit bureaus are required to follow reasonable procedures to ensure that subscribing creditors report information accurately. However, mistakes do occur. Your file may contain erroneous data or records of someone with a similar name. When you notify the credit bureau that you dispute the accuracy of information, it must investigate and modify or remove inaccurate data.

You should give the credit bureau any pertinent data you have concerning an error. If investigation does not resolve the dispute to your satisfaction, you may place a statement of 100 words or less in your file, explaining why you think the record is inaccurate. You may also want to place a statement in your file to explain a period of delinquency caused by some unexpected hardship, such as serious illness, a catastrophe, or unemployment, that cut off or drastically reduced your income. The credit bureau must include your statement about disputed data or a coded version of that statement -- with any report it issues about you. At your request, the credit bureau must also send a correction to any recipient of a report in the preceding six months if the report was for a credit check, or in the preceding two years if the report was for employment purposes.

You have to be persistent at challenging an item in your credit file. Be sure to keep track of the names and dates of the people you contacted at the bureau. And once the credit bureau says your record has been changed, be sure to get a copy of your new record just to make sure.

What are the legal remedies? Any consumer reporting agency or user of reported information that willfully or through negligence fails to comply with the provisions of the Fair Credit Reporting Act may be sued by the consumer. If the agency or the user is found to have violated provisions of this law, the consumer may be awarded actual damages, court costs, attorney's fees and, in the case of willful noncompliance, punitive damages as allowed by the court. The action must be brought within two years of the occurrence or within two years after the discovery of material and willful misrepresentation of information.

An unauthorized person who obtains a credit report under false pretenses may be fined up to $5,000 or imprisoned for one year, or both. The same penalties apply to anyone who willfully provides credit information to someone not authorized to receive it.

Lost or stolen cards. If you report a missing card immediately by calling the number on the back of the statement, you aren't responsible for any charges. The most that you'll owe even if you don't report losing your cards is $50 per card. But, if you're like most consumers who, on average, carry 10 cards, that adds up to $500.

A scam that many thieves use after they have stolen your wallet is to call you to say they have "found" your wallet and will mail or bring it to you. This is really just an effort to stop you from notifying the companies of the lost cards so the thief has more time to use the cards without being challenged. Don't fall for it. Notify the card issuers immediately. This is easily if you keep an up-to-date list of all your cards, account numbers and emergency phone numbers.