Applying for a credit card or a mortgage? Your credit report will play a crucial role in deciding whether a lender will approve you and how much you’ll pay in interest. Depending on your state, your credit report can even influence whether you land a job.
Having accurate information on your report is essential and yet a third of people found errors in a 2021 Consumer Reports study. To ensure you aren’t unfairly penalized with higher interest rates or unfavorable lending terms, it’s crucial to regularly review your report for errors and take steps to correct any inaccuracies you find.
Request a free credit report from each of the three major credit reporting companies using their official website, AnnualCreditReport.com. Look it over carefully, but be especially vigilant for these five common errors.
Incorrect personal information
Incorrect personal information could include a misspelled name, wrong name or transposed birthdate. Among the participants in the Consumer Reports study who found incorrect personal information on their credit reports, 56% said the problem was a wrong address.
These mistakes won’t affect your credit score, but they could cause issues if a creditor notices the information doesn’t match what you’ve provided. It might also make it more difficult to access your reports.
How do you fix incorrect personal info in a credit report?
Contact the credit reporting company to dispute the mistake. The Consumer Financial Protection Bureau has instructions and a template letter on its website that you can use. You may need to provide a copy of your driver’s license or other identification before the reporting bureau will correct the error.
Wrong account status
Review the accounts on your credit report carefully to make sure their statuses are listed correctly. Mistakes could include accounts that show up as open when they are actually closed or vice versa. Or maybe you are shown as an account owner when you are only an authorized user.
That latter mistake can be especially important if you want to apply for a Chase credit card. The company is well-known for its unofficial 5/24 rule. The rule states Chase won’t approve new accounts if you’ve opened five credit cards with any institution within the previous 24 months. If your credit report incorrectly lists you as an account owner, and not just an authorized use, it could trigger this rule.
More importantly, though, incorrect account statuses could impact your credit score. If your report shows an account as open even though you’ve fully paid off the debt, your score might not reflect your responsible behavior. Furthermore, showing debt you no longer have could increase your credit utilization ratio.
How do you fix incorrect account statuses on your credit report?
You should send a dispute letter to the credit reporting company that lists the error. You should also reach out to the creditor directly to ask for their assistance in fixing the mistake.
Accounting errors include incorrect reports of missing or late payments, duplicate accounts or incorrect credit limits and balances. There could also include incorrect dates such as the year you opened an account displaying incorrectly.
According to FICO, 35% of your credit score is based on your payment history, 30% comes from the amounts owed and 15% comes from the length of your credit history. That means accounting errors have the potential to deep-six your credit score.
How do you fix accounting errors on your credit report?
File a dispute with the credit reporting companies. Be sure to submit your request to each company so that the mistakes are corrected on all your reports. More than likely, you will need to get the creditors involved in correcting accounting mistakes. In fact, you may want to start with the creditor to ensure they haven’t reported incorrect information to begin with.
If you see accounts you don’t recognize on your credit report, that should raise glaring red flags. It could mean that your file has been confused with that of another person with a similar name or Social Security number; that’s what’s known as a “mixed credit report.” Another possibility is that a scammer has stolen your personal information and opened accounts in your name.
You don’t want to ignore potential identity theft. Left unchecked, it could touch on every part of your financial life, making it difficult to open banks accounts or even file your taxes, depending on the level of fraud involved.
How do you correct fraudulent accounts on your report?
Take immediate action if you suspect identity theft. In addition to disputing the information with the credit reporting bureaus, you should request a fraud alert on your account. This will notify anyone pulling your report to confirm that the person applying for credit is really you. The government also has other information and tools available online at identitytheft.gov.
Once you’ve uncovered any of the above mistakes, you need to keep an eye on your credit report to ensure they don’t crop up again. Sometimes, reports are corrected and then the same errors appear in the future. It’s especially important to be vigilant if you think you’ve been a victim of identity theft.
How do you avoid repeat mistakes on your credit report
Regularly review your credit report from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. By law, you can request a free copy from each of the three bureaus once a year using the website AnnualCreditReport.com. However, through December 2023, you can request your free credit reports weekly.