What to Do if Your Credit is Affected Due to Mistakes on Credit Report
If you ever used a credit card, leased or bought a car, purchased real estate, or bought anything with regular payments, you will have a credit report. The chances are that you will have one anyway from the age of 18 on.
One disturbing fact is that about 20% or 1/5 of people have or had mistakes on one or more credit reports. The impact of these mistakes is almost always negative = your credit scores have been lowered incorrectly. The result could hinder your ability to use credit as well as make you pay more than you should when using your credit.
So, how do you check your credit report?
The quickest way to get started is to request your credit reports from all 3 credit bureaus: Equifax, Experian, and TransUnion. Review each line item to be sure they are 100% correct. It is common to have an error on one report, but not others, so do not assume if one report is accurate that the others are also correct.
What are the most common mistakes that could appear on a credit report?
There are 3 main types of errors, and the first is Personal Information Errors which include:
- Incorrect name
- Misspelling of your name
- Incorrect middle initial
- Incorrect contact information (e.g., phone number and address)
Your basic information should always be correct, so make sure nothing is out of order.
Mistaken Accounts are the second common error.
These could be an indication of identity theft. Wrong accounts negatively affect your credit utilization ratio and credit rating, so you should immediately update these errors.
Account Reporting Errors are the last category. These are the most common errors, which include:
- An opened account is reported closed, or the reverse
- Timely account payments are reported late or delinquent
- Incorrect dates of late payments
- Incorrect dates on opening or closing an account
- Incorrect balance
- Incorrect credit limit
- Seven-year-long debts or older are still on your report
Your credit scores may be negatively impacted if closed accounts are mislabeled. And most of these errors have negative impacts. Once you get a copy of your credit reports, then determine if there are any errors on the reports.
What to do if you find an error on one or more credit reports?
Confirm these are errors with your service provider (e.g., your bank or utility company).
Write a dispute letter to the credit bureau that has the error on their report informing them of the error(s). Send "copies" (not originals) of your report with the errors highlighted and any materials that support your position. Keep copies of everything you send!
Within 30 days, call the credit reporting bureau and follow up on your dispute. Credit bureaus must respond to you in 30 days or remove the disputed item. They will sometimes just remove the item rather than research the dispute.
Note: Please remember that the information provided in this article is only for educational or informational purposes and is subject to change. Always consult with your financial advisor/planner or CPA about your financial situation. Their expertise is invaluable.