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Dear Money Helps: Two years ago, my mortgage company applied one of my monthly payments to someone else's account by mistake and reported to the credit bureaus that I'd been 30 days late. My credit score plunged 150 points as a result. Earlier this year I got EMC Mortgage to admit its error, and the firm promised to notify the credit bureaus. But my score hasn't budged. I need to refinance, and if it weren't for their mistake, I'd have excellent credit. Help! --Robert MacLean, Highlands Ranch, Colo.

Answer: Under the Fair Credit Reporting Act, credit bureaus are obliged to correct inaccurate information once they're made aware of it. Sounds fair enough, but unless you get an error fixed at the source, it can keep cropping up.

You did the right thing by going directly to your lender. Problem is, EMC Mortgage sold your loan earlier this year, and by the time EMC corrected the mistake, your customer data, including the error, had been passed to the new company. That firm, in turn, kept reporting the late payment to the credit bureaus.

The lesson: When you have a dispute, you need to address it with all the places your loan has been held. (The servicing agent, or the company that bills you, can tell you who has owned it previously.) On Money's request, the new firm, American Servicing Co., cleared the delinquencies in its system and notified the bureaus. It took six weeks, but your credit score has been restored, which should help you get a better refinancing rate.

A recent study by the U.S. Public Interest Research Group found that 25 percent of credit reports have mistakes serious enough to cause a denial of credit. With today's tighter loan standards, it's critical to make sure your report is up to snuff. Get a free copy from each of the three bureaus once yearly at annualcreditreport.com. To dispute an error, send a letter to the creditor's customer relations manager and copy CEOs of the credit bureaus; you can usually find these names online. It's worth the effort otherwise you could end up paying, literally, for someone else's mistake.

Tip: Once a creditor agrees to fix an error, request a copy of the universal data form, which lenders send to credit bureaus to update your report. That way, if the change isn't made, you have proof to show the bureaus.

So far Money Helps has saved readers $187,420.68

Having a financial nightmare? E-mail Donna Rosato at money_helps@moneymail.com.

Reporting By Ingrid Tharasook

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