Credit Gives, Errors Take Away

Did you know that a recent Consumer Reports study determined that about one-third of the US population have errors, both significant and insignificant, on their credit report?

Shocking, right? After all, you readily accept your credit score as accurate and never even question it because you consider its source trustworthy. But 34% is a huge number and hard to argue with.

Although the Consumer Data Industry Association disputed this report by claiming it falsified information and that the accuracy of the industry lay at about 98%, another study by the Federal Trade Commission released in 2012 claimed to have found mistakes in approximately 25% of credit reports.

Admittedly, while we find these figures unacceptable, if we look at the bigger picture, we realize that reporting errors understandably occur. Each of the “Big 3” consumer reporting agencies (Equifax, Experian, and TransUnion, known as CRAs) maintain records for more than 220 million people, which in itself is no easy feat.

With that, the question arises about how you might ensure a fault-free report. This question, fortunately, has a straightforward if not guaranteed answer: check it and correct it yourself! Let’s take a look at how you might do this.

How to Get Your Credit Report

Acquiring your credit report does not take much effort. Simply visit the site AnnualCreditReport.com or call (877) 322-8228 to claim your copy.

All CRAs must offer you a free credit report because of the Fair Credit Reporting Act (FCRA), but the Big 3 provide theirs through AnnualCreditReport.com. However, according to this law, the responsibility for confirming the accuracy of the reports falls also on the consumer’s shoulders.

To make this a bit simpler, an FCRA Amendment (the Fair and Accurate Credit Transaction Act, or FACT Act) allows you to request and receive your credit report once every 12 months from all three agencies. You must have to decide if you want all these reports at the same time or distributed throughout the year.

During the 2020 Coronavirus pandemic, the CRAs have gone a step further to help consumers keep an eye on their finances by offering weekly access to all three credit reports until April 20, 2022.

Why You Need to Monitor Your Credit Report

We have already discussed how errors can easily form a part of your credit history and how you can get your copies to ensure their accuracy. But, we also need to answer the important question about why you even need to concern yourself about it.

Consider these two simple reasons:

First, you need to check for any discrepancies that have occurred in your personal information that forms a part of the record. This becomes vital because if mistakes do exist, it could make it harder for you to even get your report. Plus, since a lot of your future credit transactions depend on the information on your credit record, errors may end up making your life much more of a hassle.

Second and more importantly, your credit score directly relates to your borrowing eligibility determined by nearly all banks and financial institutions. Your credit score, in layperson terms, is the three-digit number that reflects your debt repayment history and current debt loan, and thus the ease with which you could pay back a new loan. While it ranges from 300 to 850, the higher the score, the better.

Your credit score and your credit report form the basis of multiple important decisions, including:

• Whether the bank will offer you a personal loan or a mortgage

• The interest rate on any new loans or lines of credit

• The interest rate on current and new credit cards

• Application qualifications while apartment hunting

• Whether a utility service provider will require a service deposit, and what the size of that deposit might be

• The size of your vehicle, personal life, renter’s, or homeowner’s insurance premium

Therefore, make it a habit to check your credit report regularly.

Checking Your Credit Report for Errors

When you check your credit report for errors, you essentially audit your credit history. Yes, it should sound that important in every sense. Take proper care of your credit report, whether you plan to improve your credit or simply maintain it.

To get started, download your credit report, and then go through it, line by line. Make note of any errors you find. You might even come across information you’re uncertain about that you will want to recheck. Make sure to mark that down, too.

The errors you find can range from minor technicalities (misspelling of your name or a mailing address without the St, Dr, or other designation) to significant mistakes (account status reporting incorrectly or showing as collections when they should indicate you pay them as agreed). However, the most common errors on average are those noted below.

Common Credit Report Mistakes:

• Wrong or misspelled names

• Misspelled or mistakenly transcribed contact information like phone numbers and addresses

• Information about someone else with the same or similar name as yours inadvertently showing up on your report

• Fraudulent accounts stemming from identity theft

• Closed accounts reporting as open

• Accounts with payments incorrectly noted as late

• Discrepancies in your repayment history

• The same debt reported as open by multiple collection agencies

• Incorrectly reported credit limits or balances

Many of these errors occur as a result of inaccurate information submitted by the consumer (most commonly due to typing mistakes), accounts unverified by the reporting creditors, and transcription and other mistakes on the part of financial institutions and information furnishers.

Disputing Credit Report Errors

Just as it is your duty to watch for and identify errors on your credit report, you must also take responsibility for alerting the appropriate agencies to their presence and the need to fix any errors you find. However, it might not turn out as simple as it sounds.

First, you must let the consumer reporting agency with inaccurate information know about the mistake. You can do this through their website or through traditional snail mail. Find the contact information for all three agencies below:

Equifax

Phone Number: 866-349-5191

Website: https://www.equifax.com/personal/credit-report-services/credit-dispute

Mailing Address: Equifax Information Services LLC PO Box 740256, Atlanta GA 30374

Experian

Phone: Not published. Experian states you may dispute report errors by calling the number listed on your credit report.

Website: https://www.experian.com/disputes/main.html

Mailing Address: Experian PO Box 4500, Allen TX 75013

TransUnion

Phone Number: 800-916-8800

Website: https://www.transunion.com/credit-disputes/dispute-your-credit

Mailing Address: TransUnion Consumer Solutions, PO Box 2000, Chester PA 19016

When disputing an error, send the necessary information about the discrepancy along with valid proof to dispute it. Proof might include payment confirmations and receipts, copies of a statement, or screenshots of account information. You will save yourself time and hassle by submitting this sort of information with the initial dispute rather than waiting for the CRA to request it.

Once you have shared the details, the CRA will send your dispute to the creditor that provided the incorrect information. Within 30 days, the creditor must validate the data and inform the agency whether they want to accept or reject the claim. In case of acceptance, the CRA makes the necessary changes to the report and informs you of the update.

However, if they wish to deny the request, the furnisher will have to share with the agency the relevant documentation proving their claim is correct. In such cases, you may dispute the error again, but you will need to submit additional proof that supports your request. If you file the same dispute again without any new details, the CRA will very likely deny your request out of hand.

Contacting the Information Provider

If you fail to get a satisfactory result with your dispute, you need to learn the reasons for the denial. We suggest you get in touch directly with the information provider. These furnishers might include banks, credit card issuers, etc.

You can provide them with the relevant documentation that proves supports your position. In turn, they must present proof that supports their own position. Going through both, it might become easier for you to understand why your claim got denied and whether the creditor has a valid argument for their stance.

Filing a Complaint with the CFPB

Don’t be surprised if your request remains unresolved even after contacting the creditor. In such cases where you still feel justified in your position, you can file a complaint with the Consumer Financial Protection Bureau.

Follow Up Regularly With the Creditor

Ultimately, it remains essential that you follow up at regular intervals with the creditor to track the progress of your request. Once the initial 30-day period expires, you can get in touch again with the credit reporting agency to learn the status of your application and whether it has changed.

Closing Thoughts

In the end, what really matters is that the errors on your credit report get fixed as soon as possible so you don’t end up with more expensive loans and insurance premiums resulting from a lower credit rating. Checking your credit statement regularly can help. Make it a habit today.