How to End the Paranoia Due to Credit Report Errors

by Vincent King · 9 comments

Waiting on the phone anxiously to see if you’re going to be approved for that mortgage for your first home, you start to sweat when it takes forever for the mortgage specialist to let you know what he finds out. He starts talking in a monotone and without excitement, and you can’t help but read between the lines on his face.

You were denied.

How did this happen? You’ve never even been a day late on your bills! Regardless, your credit reports deems you unworthy of lending.

Mistakes Are Costly

The problem was you never thought to get a copy of your credit report because you trusted they were right, because you were told your score was 750 when you opened the credit card at Best Buy. So what happened?

It could be as simple as a data entry error. Someone could have entered the information of someone else as your social security number and their mishaps have now plummeted your 750 down to 612. It may not have been your fault, but that mistake has cost your chance to land a fabulous place you wanted to call home.

Taking Accuracy For Granted

Consumers tend to feel safe in the fact that there are responsible and reputable companies that are handling their information that there will be few mistakes. The reality is, 4 out of 5 credit reports contain mistakes, as reported by CBS in 2009. And these mistakes are costing people dearly.

Not only could your personal information be incorrect, your balance or your account information may be inaccurate too. Then, there is the horrifying reality that peoples identities may be stolen.

Leaving your report in the hands of the bureaus that report them can be a foolish mistake. But this mistake is correctable.

Get a Handle On Your Report

Take these steps to review your credit history for free yearly to keep an active eye on your credit.

  1. Order a free credit report from AnnualCreditReport.com.
  2. Get out your credit card statements and have them in front of you as you review.
  3. Verify that all of your personal information is correct, including name, date of birth, and social security numbers.
  4. Check for late payments and red flag accounts. Also check to make sure the length of time the accounts have been open is correct.
  5. Dispute any discrepancies.

Learn As Much As You Can

In particular, check these five items within each report.

Payment History – Are you payments made on time?
Amount Owed – Do you owe more than you make?
Length of Credit History – How long have you had credit?
New Credit – How much and what kinds of new credit do you have?
Types of Credit Used – Is your credit from retail stores, vehicle loans, mortgages, installment plans, etc.?

How To Dispute

If you find errors in your credit report, you’ll want to dispute the mistakes as quickly as possible.

The FTC recommends sending a certified letter with a return receipt requested to the reporting bureau and to the creditor if there are mistakes. Send your letters with the errors indicated along with your documented proof of the mistake. Keep copies of your letter and attachments for your own records, as well.

Errors found because of fraud or identity theft require a different response. The FTC recommends flagging your account for fraud by calling each reporting bureau (Equifax, Experion, and TransUnion). Then, order your reports. And, lastly, you’ll need to create an identity theft report.

Keeping close tabs on your credit report can save you dearly in headaches and hassles when you need your credit the most. Don’t be afraid to ask for a report. Your credit history is in your hands.

What stops you from reading your report once a year?

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  • Herbert says:

    Dealing with a credit bureau is a nightmare. I have yet to unravel the devastation wreaked by a stolen ID. The credit reporters and creditors do not seem to care. Does anyone out there know of lenders who will actually listen to credit history without computers?

  • Shane says:

    It is always good to stay on top of your finances and know what your credit score is so you don’t run into situations like this. Pre-approvals are also good to get so you know before you start looking.

    • Lifeisdynamic says:

      Yes, good advice. Be all checked and prepared – saves embarrassment, time, disappointment and anger!

  • adamdeals36 says:

    It’s really scary when credit company are providing information that are way not true and it’s very embarrassing to get declined due to your credit. I haven’t recovered yet from that but this tips surely give enlightenment to my confusion.

  • Great advice to keep personal up-to-date records available. You will always be able to correct the mistake more easily if you tell the bureau exactly what is wrong and give proof.

    I have actually seen the consequences of a data entry error on a credit report with a social security number. My father was trying to buy a car and was stopped by one mistaken report out of three. Even though his real report was strong (which the two showed), one had been switched with another person’s credit score who had a social security number which was one digit away from his. This person had filed two bankruptcy’s as well. He had to stay on the phone for an hour with the credit reporting bureau and come back the next day to buy the car.

  • @Meagher though mistakes are bound to happen, there are mistakes that are avoidable if we knew how.

  • Before getting a card people should take time to learn all the rules. Card have enslaved many today.

  • M Meagher says:

    Mistakes are bound to happen on credit bureau reports. What i am very suspect of is the FICO scores. They are based on information on the credit bureau reports but somehow I think that the scores are usually lower than one expects it to be even with stellar credit and good incomes. Has anyone on this blog suspected that the FICO scores are manipulated by insiders? It’s obvious that the lower your credit score the more banks and other financial institutions can increase your interest rates. Recently, my daughter bought her first new car. She has a high paying job and perfect credit…never a payment missed and school loans paid off. When she received her FICO score it was just about 10 points different from me and my husband who have a very different financial picture. With the LIBOR insider manipulation, I’ve been suspect about FICO.

  • Marbella says:

    To check in advance that your credit rating is correct is something you should always do before you start to look for a new house. As a real estate broker, many customers have missed their dream house because of inaccuracies in the information to the credit companies ..

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