Credit report errors can cost you a better credit score. Nearly 80 percent of the credit reports in a 2004 study from the U.S. Public Interest Research Group contained inaccuracies. A quarter had mistakes that could trigger a denial of credit.

Don't let outdated, incomplete or erroneous information sink your credit score. A federal law -- the Fair Credit Reporting Act -- gives you the right to dispute information in your credit report. A dispute filed with a credit reporting agency triggers an investigation through the creditor. The creditor reports back to the credit reporting company, which then notifies you of the results within 30 to 45 days. The data will either be deleted, corrected or, if verified, remain on your credit report. If any changes are made, the creditor must send the update to any credit reporting agencies that originally received the incorrect data.

How to correct credit reports

Federal law gives you the right to a free copy every 12 months from the three major credit bureaus. Head to AnnualCreditReport.com and order your free credit report. If you've used up your free annual copies, you can order a report directly from one of the credit bureaus for a fee.

Disputes filed using free annual credit reports can take up to 45 days to be resolved.

2. Review it for errors. The Bankrate feature "The ABCs of credit reports" explains the types of information to dispute. Negative information that is more than 7 years old (10 years for Chapter 7 bankruptcies) can be removed and should be disputed.

3. File a dispute. Initiate a dispute with the credit reporting agency that provided the report containing the error. There are three ways to dispute: online, in writing or on the phone.

Online disputes will be the fastest method, and the three major credit reporting agencies -- Equifax, Experian and TransUnion -- allow them. Your credit report will provide up-to-date contact information and instructions for telephone and written disputes. TransUnion and Equifax each have a mail-in dispute form you can print and fill out. The dispute form for Experian is on the last page of the consumer's Experian credit report.

In some cases, it can make sense to contact the creditor first if the company has reported something inaccurate about the account, such as a false late payment. A phone call might resolve some errors, but a paper trail provides proof of the dispute. To dispute in writing, send a certified letter to the creditor with return receipt requested.

Include in it:

• Your full name and address.
• A statement instructing the company to investigate the disputed item.
• The item in question, along with the account number.
• A reason why you believe the information is incorrect. Be concise.
• Copies of supporting documents, when appropriate.

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