How to find mistakes and fix them on your credit report
Getting and studying your credit report isn’t the most pleasant activity, but it is something you must do in order to fully understand your financial situation as it truly is. A thorough examination of your credit report might lead to the discovery of important errors that may be affecting your overall situation considerably.
Errors occur more often than you may think. According to a study conducted by the Federal Trade Commission in 2012, as many as 20% of all credit reports contain errors that have a negative effect on the credit score negatively. One-fifth of the consumers who have corrected errors on their credit report saw a significant increase in their credit score. We’re not talking about spelling errors here; some of the mistakes found in credit reports are pretty serious.
What impact do credit report errors have on a consumer’s life?
The errors in a credit report can affect more than just credit score. Here are some other things that can be affected by a reporting error:
1. Difficulties in renting a home.
2. Higher interest rates on loans.
3. Difficulties in getting a job.
What are the most common credit report errors?
When you get your free credit report, you should pay special attention to the following:
1. Personal details
Look for errors in simple things like your name, social security number, addresses and so on, which are quite common. Sometimes, people with similar names see their accounts confused.
2. Authorized user
If you have an authorized user of your credit account, you might discover that the person shows as the owner of the account.
3. Account information
Have you discovered accounts you have never seen before showing on your credit report? That is not all. You may also find some account show up as closed, when in fact it is open, or vice versa.
Did you know that 15.4 million Americans discovered their identity stolen in 2016? In terms of money, that would come to at least $16 billion stolen.
The algorithm of finding errors
If you have decided to reconcile and fix your credit report, request one free credit report from each bureau every four months. This way you will always be up to date all year long. Here are the sections that you should pay the closest attention to:
1. Check the identifying information
This means paying close attention to your name, addresses, social security number, date of birth and even the aliases section. The latter reveals other names you are known by, so keep an eye on that, too.
2. Check the list of creditors
This section lists your lenders, loan status, and credit accounts. Many errors may be found here, so pay close attention to this information. See if everything that is written there complies with reality.
3. Check the public financial records
If you have ever dealt with liens, bankruptcy, child support and other public financial situations, you will find that information here. Make sure it is all correct and up to date.
4. Check the debt collection section
Any accounts sent for debt collection will be found in this section. If there is something that looks doubtful to you, ask the collector to send you a letter confirming that action. They should be answering you in 5 days.
5. Check the inquiry section
This section reveals those who have requested info from your credit report. You may find lenders you have requested loans from or employers, but if you see somebody unknown there, ask them immediately why they are pulling credit reports on you, since each traditional credit check affects the credit score.
Fixing credit report errors
Finding errors in the credit report is a good thing. It means you know what has been wrong with the credit report and you can begin fixing it. When you see an error in a credit report, you may want to contact the credit reporting agency directly and follow their guidelines. Prepare yourself with all the necessary information so that you don’t go wrong:
- Dispute only those errors affecting your credit score.
- Accept the fact that credit reporting agencies don’t look into superficial errors or errors you have already disputed and they have turned down.
- Don’t dispute negative information if it is true.
- Write a letter and send it via certified mail, and request a return receipt. Explain the mistakes you are disputing in detail. You may use the sample letter on the FTC website as a guide.
- Wait. You may have to wait up to 30 days for an answer, but you will get one. The investigation process may take several more weeks.
- Carefully consider the resolution the credit reporting agency is offering. If it is not acceptable, you may need to file another dispute about the error, or possibly even report the credit reporting agency to FTC.
As an alternative, you may want to contact the creditor directly and ask to have the information updated. You may also want to write a statement of dispute and have it included in your credit report.
Check your credit reports from all three credit reporting agencies, to make sure your information is updated on all three. Just because you have disputed an error and have accepted the resolution, doesn’t mean that the changes will actually be made to the credit report. The same 2012 FTC study mentioned above has revealed that 70% of those who disputed errors found they were still present in their reports one year later.
Although the procedure seems difficult, it is definitely worth your time. Reviewing your credit report will save you a lot of hassle and money later down the road.
References and Sources
1. 10 surefire steps to get errors off your credit reports. Retrieved from https://www.creditcards.com/credit-card-news/10-surefire-steps-to-get-errors-off-credit_reports.php
2. FTC Issues Follow-Up Study on Credit Report Accuracy. Retrieved from https://www.ftc.gov/news-events/press-releases/2015/01/ftc-issues-follow-study-credit-report-accuracy
3. Is your credit report wrong? How to find out and fix it. Retrieved from https://www.consumerfinance.gov/about-us/blog/is-your-credit-report-wrong-how-to-find-out-and-fix-it/
4. Everything You Need to Know About Finding and Fixing Credit Report Errors. Retrieved from https://creditcards.usnews.com/everything-you-need-to-know-about-finding-and-fixing-credit-report-errors