Because your credit plays such an important role in the loan process, it's important to note that credit reports are not always right, and erroneous information can sometimes appear on your credit report, which may hinder you from getting a better home equity rate, or even a loan approval. 

If you have discovered an error on your credit report, you are entitled to dispute the accuracy. The federal Fair Credit Reporting Act gives you the right to challenge inaccurate information by contacting the reporting agencies, and the person or company who reported the information. Under the FCRA, they are responsible for correcting any errors on your credit report free of charge. 

Your dispute must be investigated by the credit reporting agencies within 30 days of reporting an error. They will contact the source of the derogatory information to confirm your credit record. Providing documentation to support your claim, if you have any, can also expedite the process.

When you apply for a home equity loan or second mortgage, your lender will order a credit report from each of the three national credit reporting agencies. A dispute must be submitted to each credit agency that is showing the inaccurate information. Once the problem is resolved, your lender can re-order your report to reflect the changes, and hopefully show an improved credit score.  

Disputing credit errors can be started online at the credit agencies: Equifax, Experian, Transunion