Common Credit Report Errors You Need to Know About

Common Credit Report Errors You Need to Know About

Your credit report plays a crucial role in your financial life, influencing everything from loan approvals to interest rates. However, errors in these reports are more common than you might think. To protect your financial health, it's essential to regularly review your credit report and know what to look for. Let's dive into the most common credit report errors and how to spot them.

Identity Errors
One of the first things to check is the accuracy of your personal information. Look for:

• Misspellings in your name, incorrect phone numbers, or wrong addresses

• Accounts that don't belong to you but are listed under your name

• Suspicious accounts that could indicate identity theft

These errors might seem minor, but they can have significant consequences. For instance, a "mixed file" occurs when your information gets confused with someone else's, potentially affecting your credit score.

Account Status Inaccuracies
Next, scrutinize how your accounts are reported:

• Closed accounts incorrectly shown as open

• Accounts where you're listed as the owner instead of an authorized user

• Inaccurate reporting of late or delinquent payments

• Wrong dates for last payments, account openings, or first delinquencies

• Duplicate listings of the same debt, possibly under different names

These errors can significantly impact your credit score and financial opportunities.

Data Management Errors
Finally, check the numerical details:

• Incorrect current balances on accounts

• Inaccurate credit limits

Even small discrepancies in these figures can affect your credit utilization ratio, a key factor in determining your credit score.

What to Do If You Find Errors

If you spot any of these errors, don't panic. You have the right to dispute inaccurate information. Here's what to do:

1. Contact the credit reporting company that provided the report

2. Reach out to the lender or company that furnished the incorrect information

3. Follow the dispute instructions provided in your credit report

Remember, maintaining an accurate credit report is crucial for your financial wellbeing. By regularly checking your report and promptly addressing any errors, you can ensure that your credit score truly reflects your financial responsibility.Stay vigilant, and don't hesitate to take action if something doesn't look right. Your financial future may depend on it!

Check your credit report for free at Annual Credit Report

Credit Report Errors on the Rise: Why You Need Regular Credit Checkups

In an era where financial health is more crucial than ever, a disturbing trend has emerged: credit report errors are skyrocketing. Recent data from Consumer Reports shows that complaints about credit report inaccuracies filed with the Consumer Financial Protection Bureau (CFPB) have more than doubled since 2021, with nearly 645,000 complaints lodged last year alone.These errors are far from trivial. They can significantly impact your financial well-being, affecting your eligibility for housing, job opportunities, and access to credit. With so much at stake, it's clear that we need to take a more proactive approach to managing our credit reports.

The Credit Checkup Initiative

In response to this alarming trend, Consumer Reports and WorkMoney have launched the "Credit Checkup" project. This initiative aims to encourage consumers to regularly review their credit reports, identify inaccuracies, and report errors promptly to the CFPB. Why it matters: Your credit report is essentially your financial report card. It plays a pivotal role in shaping your financial future, influencing loan approvals, interest rates, job prospects, and housing options.

How to Conduct Your Credit Checkup

1. Access your free reports: Thanks to a policy implemented during the COVID-19 pandemic, the three major credit reporting agencies - Equifax, Experian, and TransUnion - allow consumers to access their reports weekly at no cost through AnnualCreditReport.com.

2. Scrutinize for errors: Common mistakes include incorrect personal details like names or addresses, and misreporting of debts related to loans.

3. Report inaccuracies: If you find errors, dispute them with each major credit bureau. Provide supporting documentation and a detailed explanation of the issue.

4. Keep records: Maintain copies of all correspondence and consider sending materials via certified mail.

5. Escalate if necessary: If disputes remain unresolved, escalate the issue to the CFPB. In some cases, legal assistance may be required.

Contact us if your disputes don’t get resolved

Basics of Consumer Credit

What is Consumer Credit?

Consumer credit is the borrowing of money for goods and services. This could be in the form of credit cards, personal loans, and other lines of credit. Total consumer credit comprises of two major types: revolving and non-revolving. The borrower agrees to pay back the borrowed amount plus interest over a set period of time, usually in monthly installments. Consumer credit is commonly used for big purchases such as cars, homes, and education.

Revolving credit

Revolving credit lets you borrow up to the pre-approved credit limit. The borrower is required to make monthly payments either on the full amount or regular payments. Interest is charged on the outstanding balance. Examples include credit cards, home equity lines of credit (HELOCs), and personal and business lines of credit.

Non-revolving Credit

Non-revolving credit is a type of credit a borrower repays in fixed payments over a set period. Unlike revolving credit, a non-revolving credit is a one time arrangement. Once the credit line is paid off, the lender closes the account. Examples include: home mortgage loans, student loans and business loans.

What is a Credit Report?

A credit report is a record of an individuals credit activity and current credit situation. The report is created by the credit reporting agencies also known as credit bureaus or credit reporting companies, that collect information about an individual’s credit accounts, payment history, and other financial transactions that is submitted to them by creditors, such as lenders, credit card companies, and other financial companies. Creditors are not required to report to every credit reporting company.

What’s in My Credit Report?

Your credit report will include:

Personal information

• Your name and any name you may have used in the past in connection with a credit account, including nicknames

• Current and former addresses

• Birth date

• Social Security number

• Phone numbers

Credit accounts

• Current and historical credit accounts, including the type of account (mortgage, installment, revolving, etc.)

• The credit limit or amount

• Account balance

• Account payment history

• The date the account was opened and closed

• The name of the creditor

Collection items

Public records

• Liens

• Foreclosures

• Bankruptcies

• Civil suits and judgments

• A credit report may include information on overdue child support provided by a state or local child support agency or verified by any local, state, or federal government agency.

Inquiries 

Companies that have accessed your credit report.

What are Inquiries?

An inquiry is a record of when a lender, a creditor, or other authorized entity requests to see your credit report. There are two types: hard inquiries and soft inquires.

Hard Inquiry: Occurs when a lender or creditor requests to see and individual’s credit report as part of a credit application for a loan or credit card. Hard inquires can impact a credit score and remain on a credit report for up to 2 years. Multiple hard inquiries within a short period of time can signal to lenders that an individual is seeking a lot of credit, which could be interpreted as a sign of financial distress.

Soft Inquiry: Does not impact credit scores and are not visible to lenders. Soft inquiries can be initiated by the individual when checking their own credit report or by organizations like employers or credit monitoring services.

How Do I Check My Credit Score?

As of April 2023, Annual Credit Report is still allowing access to free credit reports once a week. Go to this link: https://www.annualcreditreport.com/index.action to get your reports from Equifax, Experian, and TransUnion.

What if I See Errors?

If you see errors on your credit report, dispute the information with the credit reporting company in writing. Explain what you think is wrong, why, and included documents that support your dispute.

Credit Bureaus, Tenant Screening, Background Checks, and Other Reports

Credit and consumer reporting is one of today's most active areas of consumer litigation, involving individual and class cases against the national consumer reporting agencies aka the “Big Three credit bureaus” (Trans Union, Equifax and Experian), tenant screening agencies, background check companies, and furnishers and users of consumer reports. Credit and consumer report errors can cause significant injury to a consumer's access to credit, employment, residential rentals, and insurance.

Credit and consumer reporting is governed by federal law - the Fair Credit Reporting Act (FCRA).