Fix Credit Report Errors before Applying for a Personal Loan

[May 28, 2009.]

 

No matter the reason someone needs a personal loan, it’s important to make their application as appealing to lenders as possible. That’s why potential borrowers should do everything possible to boost their chances of getting approved. One of the most important things people can do is repair any mistakes on their credit report before applying for a personal loan.

Free Credit Reports

Consumers should get a copy of their most recent credit report at annualcreditreport.com or by calling 1-877-322-8228. The Fair Credit Reporting Act (FCRA) requires the three major consumer reporting agencies--Experian, Equifax, and TransUnion—to provide consumers with a free report every 12 months when requested. It’s a good idea to get free reports from all three agencies because they may not be exactly the same.

Other reasons people may be eligible for a free credit report include applying for and being turned down for credit or insurance, or being turned down for a job because of their credit history. The free credit report must be requested within 60 days of receiving notice of the denial. Also, people who are unemployed but planning to look for a job within 60 days can request a free copy.

Check for Errors

It’s important to go through the report thoroughly because inaccurate information can result in a loan application being denied. People should check everything from the spelling of their name to their date of birth. Other things to look for are inaccurate names of creditors, unauthorized accounts, bankruptcies that are older than 10 years, old tax liens and judgments, and accounts that have been paid off and closed but are still showing up as open or unpaid.

Fix Errors before Applying for a Loan

While many borrowers may be desperate to receive a loan as soon as possible, it’s better if they can hold off on their application until they’ve had time to fix the errors in a credit report. They should request in writing that any errors or outdated information be corrected or removed from their file. Any phone conversations should be carefully documented.

Corrected Credit Reports

The FCRA requires that the credit bureau and the company that provided the information about the person correct the report. That should take about 30 days. Once the investigation is done, the consumer reporting agency must send the written results and the free credit report if they determine that the disputed information does need to be changed. The free report will not count as the person’s free annual credit report.

If an investigation does not result in changes to their report, people can ask that the credit bureaus include a statement of the dispute in their file and any reports in the future. People should also request in writing that the company that was the source of the disputed information include a notice of the dispute whenever they report it to the credit bureaus.

 

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.