Errors on your credit reports might mean you could be denied credit or be offered higher interest rates than you should be. But even if you're diligent about checking your reports and find a mistake, it can be a nightmare to correct it. It helps to know the proper steps to take.

A simple mix-up of similar names or an errant keystroke by someone entering information into a computer could mean errors in your reports and, at the extreme, financial devastation.

For those reasons, the Consumer Financial Protection Bureau (Consumerfinance.gov) says it plans to begin oversight of the largest credit-reporting companies, including Equifax, Experian and TransUnion.

Credit reports detail your history of credit use and are often the basis for determining whether to extend credit to you for a mortgage, car loan or credit card. You can access your reports with the three main credit-reporting agencies at Annualcreditreport.com or by calling 1-877-322-8228. By law, you can retrieve one free report a year from each of the bureaus.

If you find a mistake on your reports, here's what to do:

Determine whether it's serious: If a street name where you lived three homes ago is spelled slightly wrong, don't sweat it. It is unlikely to affect your credit.

If you see a credit account you never opened or indications of late payments or a bankruptcy that aren't yours, that's a big deal.

"If it's wrong and negative, that's much more important to address," said John Ulzheimer, president of consumer education at SmartCredit.com.

Don't be confused about how some creditors are listed. You might think you have a Home Depot credit card, but CitiBank is the actual issuer, and it will be the creditor name listed on your report, Ulzheimer said.

File a dispute, part one: Dispute the error directly with the credit reporting agency. If wrong information appears on more than one report, dispute it with each credit bureau.

You can file a dispute online or by mail. Online is easiest but not the best, especially if the report has a serious or recurring mistake, credit experts say.

For example, you can't explain how the negative mark on your report belongs to your son with the same name who moved out two years ago and probably stole your credit card. With online filing, you must categorize your dispute by choosing from a pull-down menu.

By filing in writing, you can explain the situation fully and include copies of supporting documents, such as canceled checks or court documents.

Send your letter by certified mail, "return receipt requested," so you can document what the credit reporting company received, advises the Federal Trade Commission on its Web site. Keep copies of your dispute letter and enclosures.

Credit reporting companies must "investigate" the items in question, usually within 30 days. Most times an investigation means the bureau asks the creditor if the disputed information is correct. And it's not people asking; it's all computerized.

If the creditor agrees the information is wrong, the information will be corrected on all your credit reports. You shouldn't need to repeat the procedure with the other bureaus.

If a creditor says disputed information is accurate, the information remains on your report with the bureau. If a creditor doesn't respond within the required 30 days, the information is supposed to be removed.

File a dispute, part two: If your efforts to correct a mistake fail through the usual process with the credit bureau, you can try again, but unless you provide different information, the result is likely to be the same, Ulzheimer said.

The next step is to dispute the negative item directly with the creditor, often a bank.

"At the end of the day, they're the ones you have to convince," Ulzheimer said, adding that most times legitimate errors are the fault of the creditor, not the bureau.

Again, disputing by phone is easier — the bank's phone number is on your account statement or the back of your credit card — but disputing in writing gives you a paper trail that might be useful later.

(It's important to go through the credit bureau process first. If you instead file a dispute directly with the creditor, they are not obligated under law to do anything until you first dispute it with the bureau, Ulzheimer said.)

Get an attorney: If you can't persuade the creditor to change the information, hiring a lawyer and potentially filing a lawsuit are your last resorts.

What portion of credit reports contain errors? Seems nobody knows for sure. A study by the U.S. Public Interest Research Group suggests it could be nearly eight out of 10. Or if you believe a group funded by the credit industry, fewer than one in 100 have serious errors.

"This is a fight worth fighting if there are serious errors in your credit report," said Liz Weston, author of Your Credit Score. "People who get serious errors taken off are ones who are persistent about it."