You pay your bills on time, haven’t accumulated too much debt, and generally handled your financial affairs the right way. So, you assume your credit report reflects that history, right? Unfortunately, that is not necessarily the case. A recent FTC study reports that one in five Americans have one or more errors on their credit report. In this day and age, where more and more of what you do is dependant on your credit report, how does the whole credit report thing actually work? You might be surprised. Watch the video clip posted here ( a recent story on 60Minutes) to see just how big the problem is.

Now that you have an idea how serious the problem is, you can see how crucial it is for you to monitor your credit report. You are entitled to a free copy of your credit report every year from each of the three major credit reporting agencies. You may obtain copies online by checking www.annualcreditreport.com. Check it regularly and well in advance of any major credit purchase so that you have time to dispute any inaccuracies you find.

If you find mistakes or information wrongly reported, put together documentation to dispute the reported entry and send a written dispute to each of the three credit reporting agencies as well as to the company who is reporting the inaccurate entry. Be sure to include a copy of your driver’s license and your social security card, if you have it; at least note the number on your written letter and send it certified mail, return receipt requested. I do not recommend disputing on-line; I believe it is better to have a written paper trail to document your dispute and the records contradicting the erroneous entry.

Both the credit reporting agencies and the company who reports the entry have a duty to conduct a reasonable investigation once they have been put on notice by your dispute. They are required to consider any evidence you submit as well as their own information. Once their investigation is complete, you will be sent an updated report showing the result of the investigation and will be able to see if any changes have been made.

If the credit reporting agencies continue to report or the reporting creditor refuses to make the correction and you have been damaged by the error, such as credit denied or cost of credit increased, you may have a case under the Fair Credit Reporting Act. Keep your records and contact someone, like me, who handles credit reporting cases.