Common Credit Report Errors You Need to Know About

Common Credit Report Errors You Need to Know About

Your credit report plays a crucial role in your financial life, influencing everything from loan approvals to interest rates. However, errors in these reports are more common than you might think. To protect your financial health, it's essential to regularly review your credit report and know what to look for. Let's dive into the most common credit report errors and how to spot them.

Identity Errors
One of the first things to check is the accuracy of your personal information. Look for:

• Misspellings in your name, incorrect phone numbers, or wrong addresses

• Accounts that don't belong to you but are listed under your name

• Suspicious accounts that could indicate identity theft

These errors might seem minor, but they can have significant consequences. For instance, a "mixed file" occurs when your information gets confused with someone else's, potentially affecting your credit score.

Account Status Inaccuracies
Next, scrutinize how your accounts are reported:

• Closed accounts incorrectly shown as open

• Accounts where you're listed as the owner instead of an authorized user

• Inaccurate reporting of late or delinquent payments

• Wrong dates for last payments, account openings, or first delinquencies

• Duplicate listings of the same debt, possibly under different names

These errors can significantly impact your credit score and financial opportunities.

Data Management Errors
Finally, check the numerical details:

• Incorrect current balances on accounts

• Inaccurate credit limits

Even small discrepancies in these figures can affect your credit utilization ratio, a key factor in determining your credit score.

What to Do If You Find Errors

If you spot any of these errors, don't panic. You have the right to dispute inaccurate information. Here's what to do:

1. Contact the credit reporting company that provided the report

2. Reach out to the lender or company that furnished the incorrect information

3. Follow the dispute instructions provided in your credit report

Remember, maintaining an accurate credit report is crucial for your financial wellbeing. By regularly checking your report and promptly addressing any errors, you can ensure that your credit score truly reflects your financial responsibility.Stay vigilant, and don't hesitate to take action if something doesn't look right. Your financial future may depend on it!

Check your credit report for free at Annual Credit Report

Credit Report Errors on the Rise: Why You Need Regular Credit Checkups

In an era where financial health is more crucial than ever, a disturbing trend has emerged: credit report errors are skyrocketing. Recent data from Consumer Reports shows that complaints about credit report inaccuracies filed with the Consumer Financial Protection Bureau (CFPB) have more than doubled since 2021, with nearly 645,000 complaints lodged last year alone.These errors are far from trivial. They can significantly impact your financial well-being, affecting your eligibility for housing, job opportunities, and access to credit. With so much at stake, it's clear that we need to take a more proactive approach to managing our credit reports.

The Credit Checkup Initiative

In response to this alarming trend, Consumer Reports and WorkMoney have launched the "Credit Checkup" project. This initiative aims to encourage consumers to regularly review their credit reports, identify inaccuracies, and report errors promptly to the CFPB. Why it matters: Your credit report is essentially your financial report card. It plays a pivotal role in shaping your financial future, influencing loan approvals, interest rates, job prospects, and housing options.

How to Conduct Your Credit Checkup

1. Access your free reports: Thanks to a policy implemented during the COVID-19 pandemic, the three major credit reporting agencies - Equifax, Experian, and TransUnion - allow consumers to access their reports weekly at no cost through AnnualCreditReport.com.

2. Scrutinize for errors: Common mistakes include incorrect personal details like names or addresses, and misreporting of debts related to loans.

3. Report inaccuracies: If you find errors, dispute them with each major credit bureau. Provide supporting documentation and a detailed explanation of the issue.

4. Keep records: Maintain copies of all correspondence and consider sending materials via certified mail.

5. Escalate if necessary: If disputes remain unresolved, escalate the issue to the CFPB. In some cases, legal assistance may be required.

Contact us if your disputes don’t get resolved

How Often Do Credit Scores Update?

Credit scores typically update at least once a month, but the frequency could vary depending on your lenders and unique financial situation. Lenders usually report updated information every 30-45 days, so it's possible you might receive an updated credit score each month.

However, every lender has its own reporting schedule and policies, so there is no set date each month when you can expect your credit scores to be updated. The information in your credit reports must update first before your credit scores can update.

The frequency of credit score updates depends on how many active credit accounts you have and when each of those lenders reports new information

It's important to note that each credit monitoring service may update at different times, and not all lenders report to all three credit reporting agencies, which is one reason why you may see some variations in your credit scores.

Several factors can affect credit scores, including:

1. Payment history: Payment history is the most significant factor that affects credit scores, accounting for 35% of the total score. It considers whether you have paid your bills on time for each account on your credit report, including credit cards, loans, and other debts.

2. Amounts owed: The total amount you owe on your credit accounts and the percentage of your available credit that you are using also affect your credit score. This factor makes up 30% of your credit score.

3. Length of credit history: The length of time you have had credit accounts is another factor that affects your credit score, accounting for 15% of the total score. The longer your credit history, the better your score.

4. New credit: Opening new credit accounts can also affect your credit score, making up 10% of the total score.

5. Applying for multiple credit accounts in a short period can negatively impact your score.

6. Credit mix: The types of credit accounts you have, such as credit cards, loans, and mortgages, also affect your credit score. This factor makes up 10% of the total score. Having a mix of credit accounts can positively impact your score.

It's important to note that different credit-scoring models may weigh these factors differently, and lenders may also consider other factors when evaluating your creditworthiness. However, understanding these factors can help you manage your credit accounts and improve your credit score over time.

Ultimately, it's a good idea to check your credit reports regularly for accuracy and monitor your credit score to ensure that you are aware of any changes.

You can check your credit report for free once a week at: https://www.annualcreditreport.com

This site provides your full report from Experian, Equifax, and TransUnion.

You Can Repair Your Credit Without a Credit Repair Service

Credit repair companies can remove information on your credit report that is lowering your credit score but they cannot remove negative marks if the information is accurate, timely, and verifiable. Credit repair services can cost you around $100 a month, but everything the service does, you can also do on your own. 

Your credit score is calculated from information in your credit reports. A study from the Federal Trade Commission found that 5% of consumers had errors on their credit reports that could significantly lower their scores. 

Legitimate credit repair services check your reports for information that shouldn’t be there and dispute it on your behalf. They may also check to make sure the information does not reappear. Sometimes information that is accurate but cannot be substantiated is removed, but it could be reinstated if it is verified later. 

Errors that can be addressed: 

• Accounts that do not belong to you.
  

• Bankruptcy or other legal actions that were not yours.
  

• Misspellings, which may mix in negative entries that belong to someone with a similar name — or may mean positive entries aren't showing up when they should.
  

• Negative marks that are too old to be included.
  

• Debts that can't be validated and verified.

Using a credit repair service can cost between $79-$129, and the process could take several months to a year. You may also be required to setup a fee to begin. Credit repair services argue that you will save money because of lowered interest rates. It is true that lower interest rates go to borrowers with higher scores but it is also true that you can handle credit repair yourself. 

You can opt to fix your credit report on your own. Here is how: 

• Obtain your credit report: As of now you can retrieve your credit reports for free once a week at www.annualcreditreport.com until April 2022. Check all of your information and verify that it is accurate.

• Dispute errors: As a consumer, you can dispute errors directly with the three major credit bureaus. All three bureaus have an online dispute process, but it is more efficient to send in a complaint by certified mail. This provides proof of service and a real person will have to look at your information.

• Work on your payment history: The biggest factor affecting your credit score is your record of paying bills on time. If you have late or missed payments, that can drag your score down. It is important to bring your late accounts to current as soon as possible and consider writing a goodwill letter asking your creditor to remove the make from your credit reports.

• Use less of your available credit: How much of your available credit card limit you are using is known as your credit utilization ratio. The lower, the better for your score. If you can afford to do so, consider making multiple small payments in the billing cycle to help keep this ratio down.
  

Before deciding to use a credit repair service, know that you can do all of this on your own. It is as simple as looking through your reports and verifying the information without the cost. If you have inaccurate information on your credit report, you may be entitled to a settlement. 

If you find inaccurate information, be sure to dispute the information. If you need help, reach out to us for help in the process. We may also be able to obtain a settlement for you. 

Twitter Shredded by Credit Karma's Comically Inaccurate Scoring

Last week, Twitter was bombarded with consumers expressing their (hilarious) frustrations concerning their credit scores provided by Credit Karma, the personal finance company owned by Intuit. 

The frustration comes from users realizing that Credit Karma is providing them with lower credit scores than what is found on their credit reports. 

Consumers were tweeting about applying for credit cards, loans, and attempting to purchase vehicles thinking that they had good or excellent credit, only to find out that the credit score that the issuer pulled was lower than what they had found on Credit Karma. The tweet that started the meme trend can be found here.  

Twitter users were quick to share and create memes about how their credit score was inflated on Credit Karma. @RiotGrlErin had even tweeted “checking your credit score on credit karma is like checking your symptoms on WebMd.”

But, users were on to something important when it comes to checking your credit score. There are many reasons why your credit scores differ between what a personal finance website tells you and what lenders or credit card companies find. There are mainly two reasons: For one, a lender may pull your credit from different credit bureaus, either Equifax, Experian, or TransUnion. Your score can differ depending on which bureau your report is pulled from, since they do not all receive the same information about your credit accounts. Secondly, there are different credit score models and versions that exist across the board. 

Credit Karma’s website states that they use the VantageScore® 3.0 model. VantageScore may look at the same facts that the other popular FICO scoring models does, such as your payment history, amounts owed, length of credit history, new credit and your credit mix but each scoring model weighs these factors differently. Because of this, VantageScore and FICO Scores tend to vary from one another. The VantageScore® 3.0 on Credit Karma will likely be different from your FICO Score that lenders use most often. If you are planning on applying for credit, make sure to check your FICO score since there is a good chance that lenders will use this to determine your creditworthiness. FICO Scores are used in over 90% of U.S. lending decisions. It is important to note that there are also industry-specific FICO Scores to look at when you are planning a specific purchase. For example FICO® Auto Scores are ideal if you are wanting to finance a car with an auto loan. If you are planning to buy a house you should look at FICO® Scores 2, 5 and 4. 

The best way to look at your scores is to visit www.annualcreditreport.com where you can access and download your reports from Equifax, Experian, and Trans Union. Due to Covid, your report is free to access once a week until April 2021. 

Feel free to shoot us a message for any questions!

How Can You Obtain Your Credit Report?

You can obtain your credit report directly from each of the consumer reporting agencies -Trans Union, Equifax, Experian or CSC Credit Services.  The FCRA guarantees you access to your credit report for free from each of the three nationwide credit reporting companies —Trans Union, Equifax and Experian — every 12 months. Note that for all Indiana residents your Equifax credit report is created from credit files which, though housed on Equifax’s database, are actually owned by CSC Credit Services.  To obtain your free annual credit report you should visit AnnualCreditReport.com - the ONLY authorized source for the free annual credit report that's yours by law.