When Good Credit Reports Go Bad: How To Dispute Collections Errors
For a very long time, I would only check my credit report about every 6 months. I had a good score so I wasn’t too worried about it. Then it happened. I got my credit report and saw that my score had tanked almost 50 points since my last report. I couldn’t believe it. How could this be?
And then I found the reason when scanning the report – a collections account was listed that wasn’t mine.
About 6 years ago I lived at an apartment complex and about half-way through my lease I upgraded to a bigger unit to accommodate a new roommate. Even though I had canceled the electricity account at the old apartment, and opened a new one in the new apartment, the energy company somehow reopened the old account in my name even after I received my final bill and cancellation confirmation.
The new residents apparently realized the mistake and decided not to get the utilities in their own names. They ignored their electric bills and I was none-the-wiser. How would I know – they were getting the bills, not me. Years later, I see this account in collections pop up and my score drops 50 points. That was my only notification.
Now I was faced with the daunting task of proving this 6 year old electric bill wasn’t mine. I needed to get it off my credit report pronto.
I gave myself a few minutes to calm down then I started ripping through my old boxes of paperwork trying to find any evidence that could support my case. Miraculously, my utility bills from those two apartments made it through 3 moves. Armed with the account numbers and bills associated with both apartments I developed a plan of attack.
First I called the energy company to get answers. I gently explained what happened and how I was working to get it resolved. I asked them to look up the accounts and tell me all the information associated with those accounts. I also had them fax me the entire payment histories for my records. It took speaking to several people (and even management) but they did eventually acknowledge that I canceled the account and any bills after that point were not my responsibility. I asked them to send me a ledger with the account number and a zero balance for my records.
Next, I called the collections agency (I got the number from the energy company) and explained the situation. I faxed them the copy of the ledger showing I owed nothing. I asked them to remove the error from my credit report but they said they couldn’t remove the account until the complaining company requested that it be dropped or they saw proof of payment. I wasn’t about to pay a bill that wasn’t mine so it came down to the energy company needing to withdraw the claim with them directly.
I then called the energy company, asked for the manager that had helped me previously, and explained that I needed them to escalate the issue and have their accounting department contact the collections agency. I got a confirmation on this action and kept checking back.
After I was able to confirm with the collections agency that the matter was cleared I kept checking my credit report to see when it would drop off. In a little over a month the problem was gone.
Could this happen to you? I suppose so if it happened to me. Here’s how to deal with it:
Your Plan of Attack
1. Calm down and gather the facts. Seriously. I know how mad you will be because I’ve been there. Calling people immediately and screaming at them will not fix the problem any faster. Take a moment to look through your files to see if you have any information that could help disprove this claim. Get organized and have everything in order. You won’t be productive and rational if you are still fuming or unprepared.
2. Call the company that reported the account to the collections agency and get information/records. Explain the situation and try to resolve it with them before calling the collections agency. It will save you a step. If they are the ones that reported the problem they are the ones who can ultimately remove it from collections. Ask them to contact the collections agency immediately to withdraw the claim as an error. Make sure to write down everyone’s name, the time you called, and any confirmation numbers. Take detailed notes. This will help if there is a problem.
3. Call the collections agency yourself and try to resolve it from your end. I wasn’t about to sit and wait for the energy company to contact them. I put my problem on their radar by speaking to them about it as well. Fax them the information you received from the complaining company showing you are not responsible or that your account shows a zero balance. Make sure to speak politely to these folks even if they are rude to you. They deal with irate people all the time and you might not get very far if you turn into “just another angry caller”.
4. Follow up. Call the collections agency to make sure they got the information and to see if they have heard from the complaining company. Keep on top of it. They will not call you to keep you informed; you must call them to confirm when things get resolved. Do whatever it takes to help get the situation fixed.
5. Write the owner of your credit file. If no action has been taken to remove the incorrect information draft a letter explaining your case to the owner of your credit report (in my case it was CSC Credit Services). This agency will be listed on your credit report. Be sure to include copies of any proof supporting your claim. This letter will get them to launch their own investigation into the matter. Luckily, my case was resolved before I had to send it. I still have the letter in draft form though in case it ever pops back up.
6. Keep checking your credit report. In my case, it took about 2 weeks to get the collection agency to withdraw the claim and it took over a month for it to actually drop off my credit report. My score bounced back at that time, too. Every case is different and it may take longer for yours to resolve. Check your credit report monthly while you are waiting for this problem to clear up.
Yes, you’ll be angry and you will expect them to remove the error immediately because it was their mistake. The reality is that it will take some time for the agencies to coordinate and update the report. Be patient – just not so patient that you forget about it.
Hopefully these steps will help you if you find yourself in a similar situation. Just know that if it is fraudulent it can be resolved.
On a side note – I was definitely lucky that I kept 7 years worth of records in this case. If I hadn’t this story might be a lot longer and more painful.
More information on disputing an error can be found from the Federal Trade Commision.