Is your credit report wrong?

The importance of having good credit cannot be stressed enough. Our economy runs on credit. To use your credit card or to secure a mortgage, it’s necessary for a lender to extend to you a line of credit. Maintaining a good credit score helps to ensure that you will have no trouble qualifying for loans or credit cards when you need them.

What is a credit score? It’s a prediction of your “credit behavior”; in other words, how likely you are to pay back your loans on time. Factors that companies use to create your credit score include, but are not limited to: bill paying history, current unpaid debt, the number and type of loans you have. 

Credit scores are calculated based on information found in your credit report, a statement containing information about your credit activity and current credit situation. This information is collected by credit-reporting agencies or credit bureaus, the three largest being Experian, Equifax, and TransUnion.

What happens to your credit score if your credit reports are wrong? Unfortunately, 20% of consumers have a “potentially material error” in their credit file that marks them a higher credit risk. A material error can include inaccuracies in the following:

  • Account balances
  • Number of accounts set to a collection agency
  • Number of credit inquiries
  • Number of late or missed payments
  • Outdated balance or credit-limit information
  • Closed accounts shown as open

These errors don’t benefit you

Accuracy on your credit reports matters because you could end up with an incorrect lower credit score. What is the fall-out from having material errors on your credit reports?

  • Higher interest rates
  • Less favorable loan terms
  • Difficulty getting approved for loans and/or credit cards
  • Denied credit

According to a report released by the U.S. Public Interest Research Group, a nonprofit consumer advocacy group, consumers filed a record number of complaints with the Consumer Financial Protection Bureau in 2020; 63% of the complaints dealt with credit reporting errors

Is there anything that you can do about it?

For any type of credit account, make it a practice to check your credit reports on a regular basis, especially if you have a very common last name. Is your credit report wrong? If so, the first thing to do is open a dispute with each credit bureau by mail, phone or online. They must investigate and inform you of the result. 

You can also contact the business that provided the incorrect information to investigate and ask the credit bureaus to delete it.

If disputing does not resolve your issues, you can file a complaint with the Consumer Financial Protection Bureau or the Federal Trade Commission. If none of this provides the results, consider hiring a false credit reporting lawyer to help resolve the dispute with a credit bureau or collection agency.

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