How to Contest a Bad Credit Score

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What should you do when you’ve been denied a loan or charged a higher rate of interest because the lender says you have a bad credit score?

Your credit score may not be great if you’ve missed or been late with payments, had collection agencies calling you or declared bankruptcy within the last few years. But if you’ve done a fairly good job of handling your money, there could be an error on your credit report. A bad credit score may also be an indication that someone has been using credit improperly in your name.

When you’re denied credit, the lender is required by federal law to give you the reason why, your credit score and the name of the credit reporting agency it used.  Federal law also requires each of the three nationwide consumer credit reporting companies--Equifax, Experian and Transunion--to give you a free credit report each year.  Go to to obtain a copy. (Beware of other websites that may advertise free reports but have some strings attached, like credit monitoring services for which you’ll pay a fee.)

Carefully check your credit report for:

  • Inaccurate or outdated information.
    • Is your name and address correct? Is an account from someone with a similar name showing up on your report?
    • Does your credit record report that you still owe money on a loan, a credit card or a lien when you have actually paid it off?
    • If you declared Chapter 7 bankruptcy more than 10 years ago, that information should no longer be listed on your credit report.
    • Most other information--Chapter 13 bankruptcies, late payments, foreclosures, and collections--should be removed from your credit report after 7 years.
  • Accounts that you don’t recognize.
    • Are there credit cards listed that you never signed up for--cards that are now showing late payments and dragging down your credit score? Someone may have stolen your identity and applied for cards or loans in your name.

When you find an error, notify the credit bureau and also the company from which it got the report. Include information about the error, a copy of the portion of your report that contains the error, and any back-up information that shows you have actually paid off the account. (The web pages of the three credit reporting agencies have detailed information about how to do this.)

If the information listed on your credit report is correct and you’re still not happy with your credit score, look for ways to improve it. Educate yourself about how credit bureaus calculate your score and look for areas where you can do better:

  • Make payments on time.
  • Pay down your balances so that you’ll have a better credit utilization score (the amount of credit you’re eligible for vs the amount of credit that you’re actually using).
  • Don’t apply for new credit too often. When lenders check your credit record, they’re looking to see if you’re also applying for other types of credit. Too many of those “hard inquiries” can bring down your credit score.
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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.