How to add a notice of correction to your credit reports

By Michael Lloyd

If there's adverse information on your credit report that you feel gives potential lenders the wrong impression about your borrowing history, you can add a notice of correction to your file - a short statement that explains the circumstances behind any unflattering data. This is an opportunity for you to provide your side of the story to any company that accesses your profile when you apply for credit.

The Consumer Credit Act of 1974 gives you the right to add a note to your credit report if you feel certain entries are misleading, or if they came about as the result of extenuating circumstances. You can also attach a notice to an entry you've disputed with a credit provider, even if the issue has been resolved in favour of the creditor.notice-of-correction

"Your notice must be factual, can't be defamatory and should be no longer than 200 words," James Jones, head of consumer affairs at credit reference agency Experian, said in an emailed response to questions. "Any lender you apply to in the future should read your notice, so it could help your cause, particularly if there is a very good reason behind a credit report blemish."

Whatever the nature of the notice you submit, any lender you apply to for credit has to review it before making a decision. However, credit providers are under no obligation to take your submission into account.

As such, it's likely that a notice of correction will only make a difference to a credit application in borderline cases. If you have a very poor credit score when applying for a highly competitive credit product, it's unlikely that any explanation you provide will make much of a difference to the outcome. But as applying a notice is free, it's certainly worth taking the time to add one if you feel that doing so might swing a creditor's decision in your favour, especially if your financial history is in pretty good shape otherwise.

Applying a notice of correction
As different lenders use a mix of credit scoring methods, you'll need to send notices to all three major reference agencies: Callcredit, Equifax and Experian. How you'll add the notice varies slightly with each firm, but you'll typically be able to add a note online if you're subscribed to a credit monitoring service provided by one of these companies, or by sending your correction through the post. For more details on how to add the notice, visit the instruction pages for each of the three credit rating agencies:

The submission you supply will need to be based on the facts of the incident your notice relates to, and be neither frivolous nor libellous, per the Consumer Credit Act. It's also worth bearing in mind that you won't be able to refer to any lender by name in your entry. Make sure your note is as objective as possible, and does not single out any individuals or companies for unfair criticism.

Experian offers the following as a good example of how a notice of correction should be written.

I, Mr/Ms XXXXXX, would like to explain the circumstances that led to the late payments/defaults recorded against the account started on DD/MM/YY. I became unemployed and my income was reduced to XXXX. I unfortunately was unable to keep the original payment contract. I ask all lenders searching my credit report to take this into account.

You might also emphasise that you are making attempts to fix the problem -- by pointing out that you've made all payments on time for the past several months, for example. Also double-check your spelling and grammar before you submit your notice of correction. It creates a good impression.

What happens after you submit your notice
The reference agencies will likely send your notice back to you to be rewritten if it fails to adhere to their rules, or they may pass your note to the Information Commissioner for arbitration. This may slow down the process of getting your notice applied to your file, which might be an issue if you're keen to apply for a particular credit product sooner rather than later.

In fact, adding a notice to your file will slow down all credit application processes, even if the submission you provide is free from errors and is added to your profiles in a timely manner. As automated credit checking systems are unable to properly assess notices of correction, any profile that includes one will have to be reviewed manually.

"Any application you make will have to be referred to the lender's underwriting team to manually assess," Jones said. "Credit scoring systems can't read and interpret prose, so it will delay any application you make. But if this changes a 'no' into a 'yes', you'll probably be happy to wait a little longer for the decision."

See related: Financial disassociation: How to get a credit divorce, How to fix mistakes in your credit report

Updated: 15 July 2016