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Checking your credit report can open a Pandora's box, and trying to fix the problems can make things even worse.

The point of inspecting your credit record -- detailed in an

earlier column -- is to look for any inaccuracies that could prevent you from getting a loan or force you to pay a higher interest rate. If you do wind up finding mistakes on your record, you could be in for a grueling battle to get those errors corrected.

"Anything a creditor reports is considered true. If that creditor routinely makes errors, goes out of business or is uncooperative, you're out of luck," writes reader

Brian Greene

. "You are considered a deadbeat no matter how much good credit you have, simply because of one piece of bad information," Greene adds. "The problem is: Businesses that rely on credit reports don't give a damn whether information was correct or not in the first place."

Miscommunication of data or identity fraud can cause false information to show up on your credit history, and, as we shall see, sometimes such misinformation can pop up again even if you think it's been removed. The credit-reporting industry is taking steps to quickly correct inaccuracies and assist victims of identity theft, but the anecdotal evidence is enough to strike fear in your heart.

In a story in its July issue,

Consumer Reports

asked 25

Consumers Union

staffers and family members to retrieve their credit reports and inspect what they found. Of the 63 reports the magazine examined, more than half of them contained inaccuracies.

If you have a common name or share the same name as a parent or child, you might run into the problem of having your information commingled another person's. One attorney recalls a client's credit record that included his father's

JC Penney

account, which had been opened before the client had been born.

In theory, fixing an inaccurate credit report shouldn't be that difficult. In actuality, it could result in an unending series of letters, phone calls and screams.

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Under the

Fair Credit Reporting Act

, credit-reporting agencies, creditors and information providers are responsible for correcting inaccurate or incomplete information in your report. (The big three reporting agencies are


Experian and

Trans Union.)

If you notify a credit-reporting agency about an error in your record, that business must investigate the information in question -- usually within 30 days -- and also must forward all pertinent data about the dispute to the creditor involved. An Equifax spokesman says his firm's average response time is 12 days.

The credit-reporting agency then contacts the source of the information, such as a lender or creditor. Either the lender that submitted the information takes it off your report or verifies it and the data stays on your credit record.

The agency must then must give you a written report of the investigation, and a copy of your report if the investigation results in any change. If that investigation doesn't resolve the dispute, you may add a brief statement to your file.

But if you find a mistake, you should be aggressive from the start. Send a letter and documentation to all three credit-reporting agencies and any creditors who are disseminating the inaccurate information. You should fully identify yourself, state your problem and tell them to delete and suppress any incorrect information. You want to put them all on notice at the same time.

Based on credit bureau statistics, the nonprofit

Privacy Rights Clearinghouse estimates that 500,000 to 700,000 people will be victims of identity theft this year. If you suspect that your identity has been stolen, you should also immediately call the

fraud hot lines at each of the credit-reporting agencies. They can put fraud alerts on your credit reports, which tell lenders they must call you before issuing any additional credit.

That's a start. Hopefully, the reporting agencies will update your records and you won't have further problems.

For some consumers, however, speedy resolution is a myth.

Beth Givens, director of the Privacy Rights Clearinghouse, says sometimes fraud victims get erroneous information removed from their credit records only to see the same information reappear as creditors continue to distribute the incorrect data to the reporting agencies. "They aren't careful to check whether something has been removed because of a fraudulent account, and then it goes back on your credit report," Givens says.

Even putting a fraud alert on your credit records isn't fool proof. "Many credit issuers don't pay attention to these statements," Givens says. Or they don't carefully inspect applications when extending credit to someone who might be an impostor.

Carol Mixon

knows this firsthand. Mixon, a court reporter living in Shreveport, La., has been trying to clear her credit history for six years after having her identity stolen.

"I started getting calls about accounts in the Houston area, and I live outside of Shreveport," Mixon says. Some of the stores that opened these fraudulent credit accounts showed her the filled-out applications. "Some stores showed me living in Houston at a fraudulent address and working in Shreveport. And it's a five-hour drive," she laments. "Don't they look and see two addresses and kind of wonder about it? It's something I wouldn't have believed if it didn't happen to me."

Her credit was in tatters, and she found that trying to contact the credit-reporting agencies to correct the problem was a nightmare. "I could have spent 12 hours a day trying to get through to them," Mixon says. Instead, she hired a lawyer and sued. After six years of doing battle, her credit record is on the verge of being accurate.

Let's hope your record is clean and correct.

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Dear Dagen aims to provide general fund information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.