When was the last time you checked your credit reports for mistakes?

The Federal Trade Commission says about a quarter of consumers have found errors that could drag down their credit scores, while 5% have discovered seriously wrong information that could force them to pay more for credit cards, insurance or other financial products.

If you do find an error, fixing it is fairly simple. Just follow these five steps.

1. Write a dispute letter

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Write a dispute letter that clearly lays out your case.

Credit agencies don't like to admit they're wrong, so you'll need proper documentation to dispute an error.

The FTC recommends writing a dispute letter that clearly states the nature of the mistake (for example, a false report of a maxed-out credit card). Helpful dispute form letters can be found online, including on the FTC's website.

Next, gather all documents that support your case, and make copies to be sent along with the letter.

This letter will be used throughout the dispute process, so get it together, stat!

2. Call the offending credit bureau

The next step is to call the credit reporting agency that produced the report with the error on it.

This will be one of the big three credit bureaus: Experian, TransUnion or Equifax.

Explain the issue, and say that you’ll be mailing evidence of the error.

Then, send the agency a certified copy of the dispute letter and your supporting documents.

3. Contact the creditor that reported the error

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Send a copy of your dispute letter to the creditor in question.

Now that you’ve sent off the letter, you’ll want to call the company that reported the error, whether it was your bank, your auto lender, a credit card issuer or some other creditor.

Let this company know about the error, and send it one of the other copies of your dispute letter, along with your documentation.

It’s essential that the creditor set its own records straight to avoid false reporting in the future.

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4. Go over the results of the investigation

The credit bureau with the mistake on your report (again, that's either Experian, Equifax or TransUnion) must investigate within 30 days.

You'll receive the findings in writing, which may take up to a month and a half. 

If the creditor that provided the bad information agrees with you that an error was made, that company is supposed to notify all three bureas to correct their files on you.

If the investigation fails to resolve the situation, you should ask the credit bureau that looked into your dispute to include a statement in its file detailing the matter that you raised.

5. Get a free, revised credit report

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But if the dispute results in an item being changed or removed from your credit report, the credit bureau will send you a free copy of your report, so you can see how your efforts paid off!

The report doesn't count as the free report you're entitled to every year from each of the big three credit agencies.

You can ask the credit bureau in question to send notices of the correction to any creditor or other company that received a copy of your report in the last six months.

You also can have the updated version sent to any employer who asked to see your credit report within the last two years.

If the negative information that you disputed turned out to be accurate, it will eventually fall off your credit report — though that can take up to seven years.

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