Credit reporting errors and ommissions can make a huge negative impact on your financial wellbeing. That’s why we want to share with you the top 7 credit reporting errors that you can look for when you check your credit report. Mistakes occur even in this day and age and much more than you would think. As the consumer, you need to be alert and proactive to get things right to have the best credit report and score you can have.
What information is on a credit report?
Your credit report from each of the major three credit agencies (Equifax, Experian, and Transunion) hold your entire financial history and activity and is the basis of calculating your credit score. Begin the process by learning the information in your report. You can get a copy of your report for free from each credit bureau each year by using annualcreditreport.com. Make sure you are taking advantage of this opportunity and reviewing your data to make sure no blunders are made.
Your credit report is broken into several different sections and include the following information:
- current and former addresses
- date of birth
- Social Security number
- sometimes your employer
- Lender or creditor name and account number
- Date the account was opened and closed if applicable
- Original and current balance
- Monthly payment amount
- Payment history
- Current status (paid as agreed, 30 days late, closed by
grantor, closed, etc.)
In this section, you may see some creditors reporting your credit limit or even the highest balance. Be aware of your credit utilization as it affects your overall credit health. Recognize your credit reports are always changing. Payments take time to show on your credit report, sometimes up to 30 days.
It used to be that you would find a variety of public records on your credit report including civil
This section will include any hard inquiries made to request your credit report. This occurs when you apply for a new loan or credit card.
Top Credit Reporting Errors:
Mispellingor incorrect name, address, or Social Security number
- Missing credit accounts. Make sure nothing is
- Payments applied to the wrong account
- Accounts listed more than once. This looks like you have more debt than you do.
- Accounts listed as “Closed by Grantor” which means the lender closed the account when it should have been just “closed”
- If divorced, check to make sure your former spouse’s accounts are no longer appearing on your
- Unusual accounts. This can be a sign of identity theft.
How to fix errors?
When you find an inaccuracy in your credit report, you’ll want to do something fast. It is best to notify both the creditor or lender AND the credit bureau. They are both involved in making the error. According to the Fair Credit Reporting Act, they both are responsible for fixing the problem. When you attempt to correct an error, this is referred to as a “dispute”. It does not cost anything to dispute something on your credit report.
- Contact the creditor or lender by calling their customer service number or using their information online. Many provide an address for mailing a dispute
. Asfor the three credit bureaus, use their online submissions for disputes. You’ll need to submit information including your social security number to verify your identity. Equifax and Transunion may still accept disputes by phone or mail.
TIP: If disputing by mail, use our template letter and make sure you send certified mail with return receipt.
With all your disputes, make sure you include your complete name and address. Provide a clear explanation of what you believe to be wrong as well as any supporting documentation that helps your case. It would be helpful to include a copy of your report with the inaccuracy circled. Include what you wish to happen, such as deletion or correction of the information. Keep copies of what you are submitting.
What happens next?
Once you have disputed something with a lender or creditor, they are required to include your dispute in any future credit bureau submissions. The dispute process can take from 30-90 days. Usually, the bureaus are responsive within 30 days. You can monitor your credit report for corrections. Many states allow for an additional free report once you’ve disputed something. Check each credit agency to see if you qualify for a free report. Also, some of the credit bureaus allow you to check the status of your dispute if you’ve submitted online or you may receive an update by email.
What if your dispute is denied?
While many times errors are corrected, your dispute may be denied. If you disagree with any of the credit bureaus response, you can make a special request that the credit bureau include your dispute in your credit report. You can also have the agencies send letters to all your existing accounts with your dispute file. This service may charge a fee but it may be worth considering. Another option is to file an appeal with the Consumer Financial Protection Bureau (CFPB). If you decide to file an appeal with the CFPB, include what you sent to the bureau originally and their response. As a last resort, if the inaccurate information is causing you financial harm, consider hiring an attorney.
Why is it important to correct errors?
Your credit reports are used to formulate your credit score which ultimately is used by lenders and creditors to evaluate your financial stability. It is the key to getting what you want and need in life. Whether it’s through credit cards, auto loans, student loans, or a mortgage, your credit is imperative. If an error is made on your credit reporting, you can appear to be a high risk to lenders and creditors. You may be denied a loan or given poorer terms or interest rates. Fix those errors to make the most of your financial health.
No matter what, know that errors happen and it is up to you to stay on top of your credit reports. It is well worth taking action and making corrections. Most importantly, you now know what errors to look for and what to do about them.