Are You One of Forty Million?
Did you know that data errors on your credit report can create serious, long-term problems? That’s right. Things like higher loan rates, higher annual percentage rates (APR) on credit card balances, getting a job, or even having utilities turned on can all be negatively impacted by someone else’s mistakes on your report.
In 2013, the Federal Trade Commission released a report that found that potentially 40 million Americans (or one in five) have a mistake on at least one of their reports issued by the three big credit reporting agencies (CRAs) – Equifax, Experian and TransUnion. And of those 25%, or 10 million people, had errors so serious they resulted in excessive borrowing costs and/or lowered credit scores.
So what should you do?
First, it’s important to review your credit report annually to check that all data contained in the reports are accurate. Consumers are entitled to receive one free report from the three CRAs each year. If you request a report every four months you can ensure each remains error free throughout the year. Check for things like variations of your name that you don't normally use, unfamiliar addresses, incorrect Social Security numbers, or a wrong date of birth. Of course, larger mistakes, like long ago paid-off debt that suddenly appears, or a court judgement that has nothing to do with you, are easier to spot. Be sure to also check who has pulled your credit information recently. If you see company names you don’t recognize, that can be a sign your file may have been mixed up with someone else’s or that you may be a victim of identity theft. As an alternative to requesting copies of your credit reports, you can also subscribe to credit monitoring services that will notify you daily of changes to your credit reports, including those mentioned above and more.
What you don’t know really can hurt you
If you do find errors, it is important to contact the CRA and get them corrected as soon as possible. And while that may sound simple enough, correcting data inaccuracies is often a time consuming, arduous task. It’s not unusual to hear about people taking months, sometimes years, trying to scrub mistakes from their reports. Even though the Fair Credit Reporting Act requires CRAs to conduct reasonable investigations whenever consumers initiate a dispute, they often leave it to the lenders, debt collectors, or other data providers to find the errors and correct them. And if those companies verify incorrect data as accurate, you can find yourself initiating the same dispute all over again – multiple times.
Whatever you do, just don’t fall for the myth of credit repair. There is no company on earth that can fix your credit if it is truly bad. Only you can do that by paying off and remaining out of debt, paying bills on time, and generally being a good steward of your finances. In reality, the only thing that can be done if your bad credit is due to data errors on your report(s) is to get any mistakes corrected and a new report issued as soon as possible.
If, like most people, you don’t have the time, or even the patience, to correct your credit report data, there are legitimate companies who can assist. Beware of any who make you pay large, continuous monthly fees, guarantee they can erase bad credit, say they can remove bankruptcies, judgments, liens, and bad loans from your credit file forever, or suggest you create a new identity.
There is no quick fix for correcting bad data on your credit report. But it can be done effectively and efficiently when you use a trusted partner.