Checking your credit report can feel like the adult version of checking your report card. If it’s been a while, you might be in for some unexpected surprises.
The way to keep your credit report clean and your credit score in good standing is to get in the habit of reviewing your report at least once a year. And if you’re making a major purchase in the near future, experts say checking a few months in advance won’t hurt. Reviewing all the information on your report carefully and checking for errors may seem tedious, but it can help you avoid major financial pitfalls down the road.
How common are errors on credit reports?
They may be more common than you think. according to a to study Conducted by the Federal Trade Commission (FTC), one in five people has an error on at least one of their credit reports. And there are several reasons why it could happen. “A creditor providing account information may have misreported the data, or a consumer may be a victim of fraud,” says Rod Griffin, senior director of public education and advocacy at Experian.
By requesting a copy of your report from all three major credit reporting agencies at least once a year, you’ll ensure you catch any mistakes that could cost you a lot of money down the road. Although your credit score will not appear on your credit report, the information contained in your credit report will factor into your overall score. Even a seemingly insignificant error on your report can be enough to lower your score and your chances of being approved for any type of financing in the future.
What types of errors could appear on your credit report?
There are several types of errors that could appear on your report. Some common errors you may find on your credit report include:
Errors in your personally identifiable information (PII)
- This could include a misspelled or incorrect name, phone number or address
- Accounts belonging to another person with the same or similar name as yours
- Incorrect accounts as a result of identity theft
Errors related to the status of an account
- Closed accounts reported as open
- You are reported as the account owner, when you are only an authorized user
- Accounts that are incorrectly reported as past due or delinquent
- Incorrect date of last payment, date of opening or date of first delinquency
- Same debt listed more than once
- Accounts with incorrect current balance
- Accounts with an incorrect credit limit listed
Data management errors
- Reinsertion of incorrect information after it has been corrected
- Accounts that appear multiple times with different listed creditors
What do you do if you find an error on your credit report?
The first step is to go directly to the source. “It’s important to remember that you don’t have to pay to “repair” your credit. Instead, if you think there is inaccurate information on your credit report, you can dispute the information for free through the appropriate credit bureau,” says Griffin.
Here’s how to do it, step by step:
1. Request copies of your credit report from each of the bureaus
You’ll want to request a copy of your credit report from each of the major credit reporting agencies to verify that the information is actually incorrect and not a forgotten account or potential debt payment. You can request a free credit report from each of the three major credit bureaus every 12 months through Annualcreditreport.com, although all three major credit bureaus are currently offering free weekly credit reports online through December 2023 due to the pandemic of COVID-19. Equifax also offers everyone in the US six free credit reports per year through 2023 through its website.
2. Gather your supporting documents
Depending on the nature of the error, you’ll want to gather all the documents you’ll need as evidence when filing your dispute. If it’s an error in your personally identifiable information, you’ll want to have some forms of identification on hand. If the error is related to your account balances or an account that was closed but is reported to be still open, you’ll want to dig up those statements and letters that clearly list your balances or confirm an account was closed.
3. Contact the credit bureau that is listing the wrong information
The three credit bureaus (equifax, experienceY transunion) allow you to file a dispute online, by phone, or by mail. This is your main source for filing a dispute, although you can also contact the company or issuer that reported the incorrect information to the credit bureau (i.e., the “provider”) and dispute the error with them while you wait for your dispute to clear. solve it. be processed with the credit bureau.
4. Wait for a response to your dispute
Once you’ve filed your dispute, the credit reporting agencies usually have 45 days to investigate your claim and gather additional information from the provider. Once the provider has been notified and the provider has confirmed or denied the information within the dispute, the office has five business days after completing its investigation to notify you of the outcome of your dispute. If the bureau decides your dispute is valid, the information will be removed from your credit report. And, if you applied for a loan or a new line of credit, for example, and were denied because of this error, you can also request that a corrected version of your report be sent to anyone who has applied in the last six months.
If the agencies decide there is nothing wrong with your report, they will stop investigating. In these cases, you may need to provide them with additional evidence to support your dispute.
Food to go
The information in your credit report can be the deciding factor in some of the most important financial decisions you’ll make. It tells lenders how you’ve handled credit in the past and how likely you are to repay the money you borrowed in the future. Keeping a close eye on your report and promptly reporting errors to the credit bureaus will ensure that when you’re preparing to cross a major financial milestone off your bucket list, you won’t have to put your plans on hold.