A Federal Trade Commission study last year found that one in four consumer
credit reports contain errors, these include everything from minor mistakes to
outrageous oversights. It’s important to know what to look for when you’re
checking for mistakes in your credit reports. There are three types: identity
errors, incorrect account details and fraudulent accounts.
1. Identity errors
The three major credit bureaus are Equifax, Experian and TransUnion. Each
bureau maintains its own database of consumer data, including personal
information, account information and payment history. This information is
included in your credit reports. From time to time, a credit bureau – or all three –
will get some information wrong. Some of these errors are minor. For instance,
one bureau might have your street address incorrect. It’s annoying, but it won’t
hurt your credit. Other times, it’s a more serious error: Your name could become
mixed up with someone else’s, and you could begin seeing some of his accounts
on your credit report. This will affect your credit either positively or negatively,
depending on his payment history.
2. Incorrect account details
Sometimes the bank or lender providing information about your accounts to the credit
bureaus gets things wrong. On the other hand, the credit bureau could incorrectly
process the information provided. For instance, your credit card could be displaying
the wrong credit limit, your mortgage might have the incorrect origination date or your
auto loan could show as “open” when it’s clearly been closed.
3. Fraudulent accounts
This is the most serious error out there, since it means someone has used your identity
including your name, Social Security number and other personal data – to open and
begin using an account. If there’s a line of credit on your credit report that you didn’t
open, you’ll want to move quickly to ensure that the fraudster can’t continue opening
accounts in your name. You can do so by adding a security freeze on your credit reports.
A security freeze will prohibit you – or anyone posing as you – from opening any new
lines of credit. Keep the freeze on your account until you’ve sorted out what’s going on
and taken the appropriate steps to prevent fraud from happening to you again, including
signing up for a credit monitoring service. You also might want to consider changing
your Social Security number.
What to do if you spot an error
Disputing with the credit bureau. This is the most conventional route and is best for disputes
involving incorrect personal information on your credit report. Get a copy of your credit report(s)
containing the error, gather supporting documentation for your case and write a letter to the
appropriate credit bureau(s) describing your specific dispute. Make it clear and concise.
After you’ve made a copy for your own files, send the letter to the credit bureau. The credit
bureau is legally required to investigate your dispute and will typically do so within 30 days
of receiving the notification.
Disputing with the information provider. If your bank or lender is reporting incorrect information
to the credit bureaus, or if someone else opened an account in your name, start by contacting
your bank or lender (the information provider) directly. Find an email address or phone number,
and make notes of any conversations you have with a representative. Sometimes, talking to
your lender directly can facilitate the dispute process.
The bottom line: Now that you know which common errors to look for, remember that you’re
responsible for clearing up mistakes. You’re entitled to one free copy of your credit report from
each of the three credit bureaus each year. Stay on top of things by checking your credit reports
often to make sure they’re accurate.
Source: US News World Report