Posted by Elisabeth Leamy, Tue Nov 09 2010, 12:31am

A tip top credit score is more crucial than ever in the economic times we are in, because lenders are picky, picky, picky about who they approve and bestow the best interest rates upon

A tip top credit score is more crucial than ever in the economic times we are in, because lenders are picky, picky, picky about who they approve and bestow the best interest rates upon. As you probably know, your credit score is calculated by using the data in your credit report, so if that information is wrong, your score could suffer. In fact, as many as 79 percent of credit reports contain erroneous information, according to a study conducted by the U.S. Public Interest Research Group. It sounds dreary, but correcting your credit report and improving your score is actually a way to save thousands upon thousands of dollars because the higher your score, the lower the rates you will be offered on things like mortgages and car loans.

Fortunately, these days you have a right to see the reports that the big three credit bureaus keep on you and to dispute unflattering errors. You can order your reports for free by going to Scan them carefully for mistakes that could be dragging down your score. Here are the types of things you should definitely dispute:

1. Old bankruptcies: Bankruptcies remain on your report for ten tough years. If a bankruptcy entry is still there after that, complain.

2. Debts disposed of in bankruptcy: If you declared bankruptcy in the past, debts covered by that bankruptcy settlement should not appear on your report as past due or still payable because bankruptcy wipes the slate clean.

3. Outdated lawsuits and judgments: If you paid a legal judgment, it should not be in your records anymore. If you didn't pay, it's still supposed to disappear after seven years.

4.  Inaccurate tax liens: Tax liens you have paid remain on your report for seven years. Unpaid ones last 15 years, longer than anything else. (Guess who makes the laws!) If there's a lien on there longer than those two parameters, dispute it.

5.  Outdated demerits: Late payments and charge-offs, where a creditor writes your bill off because they have given up on you, are not allowed to remain on your report after seven years.

6.  Duplicate debts: The same debt should not be listed more than once, particularly by more than one debt collector.

7. Your spouse's bad debts: If your spouse failed to pay bills before your marriage or after your official divorce, as long as your divorce filing was handled properly, these should not be on your credit report.

8. Other people's accounts: Other people's account information - good or bad - should never appear on your credit statement. A cynic might say to keep the stranger's entries if they are positive, but who's to know when that person will face a financial crisis that will ruin their credit and yours.

Old credit applications: "Hard" inquiries where you apply for credit, count against you; They shouldn't remain on your report for more than two years.

Credit you didn't apply for: If you spot hard inquiries that you didn't authorize, dispute them. "Soft" inquiries, where banks check your credit report in order to offer you a preapproved card, are harmless. Checking your own report is harmless.

When you find an error on your credit report, the big three bureaus ask that you fill out a dispute form on their websites. Hopefully that alone will take care of the problem, but if you're trying to prove a crucial point --like that you never made a late payment-- you should take the additional step of providing documentation that proves your case. Do whatever it takes to get your hands on that documentation.

Under the Fair Credit Reporting Act, the credit bureau has 30 days to research your claim and get back to you. If the original bank or business that reported the false item can't prove it is true, the bureau is supposed to correct it.

If a creditor wants to reinsert negative information into your file later, the bureau is supposed to require that creditor to certify that the negative entry is accurate. The bureau is also supposed to give you a toll free number where you can call to dispute the reinsertion. This is where the process starts to sound ridiculous. I mean, where does it end? Will they re-re-insert the item you have re-corrected?

If you're not getting anywhere, what do you do? First, don't use the bureaus' online dispute process for serious inaccuracies. That makes it too easy for them to collate and categorize your complaint. Instead, go retro. Call the bureau, speak to real human beings (they are required by law to have such people) and keep detailed notes of their names and the dates of your calls.

Next, write a letter. In the letter, state what is wrong with the report and, exactly what you want the bureau to do about it - Delete it? Correct it? Modify it? Re-word it? Use the account numbers listed on the credit report, to make it easier for the bureaus to identify which line items you are disputing. This may not be the same account number in your own records, perhaps because the account has been reported (wrongly) to a debt collector who has assigned it a new number. To make yourself crystal clear, also enclose a copy of the actual credit report and circle the items in question.

Send your complaint via snail mail --return receipt requested-- with every scrap of proof you can muster. Of course, you will want to attach copies (not originals) of any documentation that proves your case.

Mail the whole fat packet to the business that are furnished the inaccurate information about you, as well. The federal government seems to be moving toward a system in which consumers will be able to challenge companies directly. You are putting those companies on notice that you are ready to fight.

Be sure to keep a copy of this letter for your records. You are starting an old-fashioned paper trail that will help show the bureau failed to take specific corrective steps. You never know, you may need to show this paper trail to government watchdogs or a jury some day

Don't forget to send your packet to every bureau that is reporting the erroneous information about you. Solving your problem at one does not help you with the others. They do not routinely share information. I dug up the physical mailing addresses of the big three credit bureaus for you, so you won't be stuck using only their automated online dispute systems. Here they are:

- Equifax

P.O. Box 740256

Atlanta, GA 30348

(800) 685-1111

- Experian

P.O. Box 2104

Allen, TX 75013-2104

(888) 397-3742

- Trans Union

Consumer Disclosure Center

P.O. Box 2000

Chester, PA 19022-2000

(800) 916-8800 or (800) 888-4213