When it comes to consumers and their credit reports, the sad fact is that errors are all too common. From on-time payments marked as late to paid off loans showing as active, these kind of mistakes can cause serious problems when it comes time to buy a home, apply for a new credit card, purchase a car, rent an apartment or even land a new job.

It is important that consumers know what is in their credit report, and it is perhaps even more important to eradicate any errors that may be found during the review.

Some errors, such as that on-time payment shown as late, or a closed account shown as open, can be quite simple to fix, often requiring little more than a phone call or a letter. Other errors, however, can be more intractable, and it is important for every consumer to know when additional help may be in order.

There are a number of ways that those seemingly intractable errors find their way into credit reports, of course. In some cases it may be as simple as the creditor reporting the information incorrectly, and even a simple typo can cause serious problems down the line.

Something as simple as a mistyped Social Security number or account number can cause real financial havoc, and it is important for consumers and credit bureaus to be on the lookout for these types of errors.

And then there is the very real threat of identity theft, the deliberate effort on the part of criminals to feed off of the good name of honest consumers. With identity theft a growing problem, it has never been more important for every consumer to review his or her credit report at least once a year, and to look for any accounts that were not authorized or that look suspicious.

Such errors should be reported to the credit reporting agency immediately, and it is important to follow up to make sure those errors have been eradicated.

When an error does pop up in a credit report, it is important for the individual to understand the process and how it should work. When an inaccurate entry is uncovered, the consumer should file a dispute with the credit reporting agency, either over the telephone, with a letter or online. Generally speaking it is always a good idea to put such disputes in writing. A telephone call is fine for the initial contact, but it is important to follow up that initial contact with a handwritten letter, or at least an email. Copies of all correspondence should be retained as well.

After the dispute has been received, the credit reporting agency has between 30 and 45 days to either verify the accuracy of the information or make any necessary changes. If the information cannot be verified, the law requires that the disputed item be removed from the individual's credit report.

While this system often works quite well for removing erroneous items from credit reports, in some cases the consumer may find that the erroneous information comes back as "verified" and remains on the report.

Some critics claim that this is often due to the fact that much of the credit reporting system is automated, and hard copies of documents and other backup information may be disregarded or given short shrift in this automated process. It seems that sometimes even the most compelling explanatory information can simply get lost in the shuffle.

When the credit reporting agency receives the dispute, they typically will send the information, generally in electronic format, to the creditor in question. The creditor will then check their system to determine whether or not the reported information is accurate. The credit reporting agency will rely on the information received from the creditor in making their final determination.

What to Do When Your Credit Report Contains an Error

It can be frustrating for consumers to try to remove information known to be erroneous from their credit report, only to hit the proverbial brick wall of the credit reporting agency. Fortunately, however, there are some steps consumers can take to navigate these treacherous waters and make sure that that wrong information is removed. Some of the most effective steps consumers can take include:

• Be sure to review all three credit reports, from all three major credit reporting agencies. Reviewing only one credit report may not give you the whole picture. It is important to request credit reports from TransUnion, Experian and Equifax, and to compare those reports carefully.
  
  
• If a problem is found, it is important to start the dispute process directly with the credit reporting agency. Doing so will ensure that the consumer retains all of his or her legal rights during the process.
• Don't let your resolution process end with the credit reporting agency. While it is important to start the dispute process with the credit reporting agency, the process need not end there. It is a good idea to contact the creditor as well, either by writing them a separate letter or by copying them on all correspondence with the credit reporting agency.
  
  
• Be sure to keep records of all correspondence. It is important to keep a copy of every piece of correspondence, including emails, letters and backup documentation. Records of all phone calls should be kept as well, including the name of the representative and the date and time of the call. Proper record keeping is important to cleaning up disputed items on a credit report.
  
  
• Keep in mind that the dispute resolution process may take some time. It is easy to get impatient and frustrated, especially when your good name is on the line, but it is important to be patient and allow the process to work as intended. It can take months to resolve disputed items, especially if there is more than one error on the report. If time is of the essence, due to an upcoming loan application for instance, it may be a good idea to ask the lender for help resolving the errors in a timely fashion.
  
  
• Finally, if all else fails consider hiring an attorney to help with the dispute resolution. In some instances a simple phone call from a law firm with experience in such matters can do more than reams of paperwork and faxed letters. While legal assistance may be needed only rarely, such help can at times be very valuable.