If you’re like most Americans, credit is a big part of your financial life. You probably have secured lines of credit, such as your mortgage and auto loan, as well as unsecured lines of credit, like your credit cards. If credit is a part of your life, experts recommend you should check your credit report at least once per year to ensure it is correct and error-free.
Although you may think you can trust your creditors and the credit bureaus to provide accurate reporting, mistakes are more common than you might think. A recent study found roughly six in ten people have credit reports that contain errors. These mistakes can have a big negative impact on your credit rating which can affect your ability to achieve your financial goals. This makes it essential to check your credit report regularly to ensure it is accurate.
By law, every consumer is entitled to one free credit report each year. You can redeem your free reports through annualcreditreport.com. Just log on to the site and follow the instructions to get your credit reports. You will notice you actually need to check 3 reports, as each of the major credit bureaus maintains their own version of your credit history. Since creditors and lenders use the reporting from all three bureaus, you need to make sure the information is accurate in all three versions.
As you check your report look for any incorrect information; some of the most common credit report errors include:
- Aliases that aren’t you. Credit reports contain variations of your name that the credit bureaus recognize as you. Typically, these are just different variations of your name used on different accounts. In some cases, you may find an alias that isn’t you which means your credit could be getting downgraded because of someone else’s bad credit habits.
- Incorrect account statuses. Each credit account listed in your report will have an account status. Make sure all of these statuses are accurate, as consumers often find their account listed as delinquent, even though it is current.
- Repeat account listings. Consumers also find accounts listed twice in their credit report; in some cases, this duplicate account may even be something as big as your mortgage. Since total debt owed and numbers of credit lines are both factors in determining your credit scores, accounts listed more than once can mean a big problem for your credit.
- Inaccurate penalty dates. By law, penalties can only be listed in your credit report for a certain period of time. If a penalty date is incorrect, you may be penalized longer than this set period. These inaccuracies will decrease your credit rating for longer, which can affect your ability to get new lines of credit or purchase a new car or home.
When you find errors or discrepancies in your credit report, take action. Find any documentation you have to support that there is a mistake on your credit report. Submit the discrepancies in writing to each of the credit bureaus along with copies of your documentation. You must submit to all three bureaus, as they are not required to communicate corrections to the other bureaus. Your creditors will get a chance to respond and confirmed errors will be removed. If your correction is rejected, you may submit a summary of your claim to be added into your credit report for future references.
Connie Solidad has been writing about finances and debt consolidation for years. She’s an expert in the industry and writes about debt management for individuals and credit counseling options and resources. When Connie is not working, she loves playing with her two dogs in Tampa, Florida. To learn more about debt management refer to ConsolidatedCredit.org.