Have you checked your credit report lately? If you’re among the 80% of Americans who haven’t, you definitely want to get on top of that. The Federal Trade Commission estimates that around 26% of all credit reports contain errors – and we’re not just sweating the small stuff here, like incorrect addresses. Many of these mistakes could prevent you from taking out loans or getting the credit line you deserve.
When the FTC recently asked 1,001 Americans to take a look at their credit reports, one out of every four respondents found errors in reports issued by the three major reporting agencies, Equifax, Experian and TransUnion. These mistakes included things like the number of late or missed payments, how many accounts have been sent to collections agencies and the number of inquiries on the report. These are all things that help determine your credit score in the first place.
But what’s worse is that when people tried to correct these problems, it didn’t always happen. Twenty percent of the inaccurate reports still went uncorrected, and only around 13% of people saw any change in their score. The good news is that only 5% of the total errors were significant enough to move the individual to a lower credit tier. Still, when you consider that 5% of Americans have those significant errors in their scores, that means there are millions of people who quite literally aren’t getting credit where credit is due.
Don’t forget that the only way to ensure that your report is accurate is to check it regularly. You’re entitled to a free report each year, so take advantage of that. While too many inquiries by other parties can hurt your score, pulling it yourself will not. In fact, it looks good to lenders, who often see it as a sign of financial responsibility.
And what if you do notice an error on your report? You should file a dispute with the credit-reporting agency. While you can do this electronically, experts recommend doing it the old fashioned way – through the mail. Sending your dispute form as a certified letter creates a paper trail, and that means you’ll have hard evidence of everything that goes down – just in case nothing comes of your initial effort to get it fixed.
Credit reporting companies are required to investigate your error claim within a month or so of its submission. If your report contains a mistake, the credit reporting company where you filed your dispute must notify the other two of the error as well. If you disagree with the results of the investigation, you can add a 100-word statement to your report in defense of yourself. This will be attached to your report when it’s given to potential lenders, and it’ll be sent to anyone who pulled your report in the recent past.
Have you been the victim of an inaccurate credit report? Did you file a complaint? If so, let us know what your experience was like in the comment section.