A credit report is something not many people examine seriously. But there’s a considerable likelihood that some of the data in your credit report might be inaccurate. If your credit report contains incorrect information, it may raise red flags and cause lenders or banks to hesitate before extending you a loan. The good news is that these errors, which might not be your fault, can be corrected in your credit report. In this article, you will comprehend what a credit report is, how to check your credit report, what are the most common credit report mistakes, and how to fix credit report errors. Let’s get started!
What is a credit report?
A credit report is an elaborate document that contains details on your credit history and present financial situation, including information on loan payments and the position of your credit accounts.
Many people have multiple credit reports. Creditors such as lenders, credit card issuers, and other financial institutions submit financial information about you to credit reporting firms, commonly called credit bureaus or consumer reporting agencies, who then collect and store data. An overview of everything you have ever done with your credit is contained in your credit report.
However, your credit prospects may be negatively impacted by any inaccurate information or errors in your credit report. You should, therefore, carefully examine for credit report errors.
Reviewing your credit report
You should thoroughly examine your credit reports as soon as you receive them. The list below of credit report inaccuracies can help you look for potential mistakes and ensure that your credit reports are correct and abreast. You should request your credit report from every one of the credit reporting companies because each of them may have different data.
What are credit report inaccuracies?
There are several credit report errors. However, the most common ones are:
Personal Information
Personal information mistakes can occasionally cause accounts owned by other persons to appear on your credit report. Identification theft, in which accounts are unintentionally opened in your name, can sometimes lead to errors linked to your identity data. It may also include:
- Identity data errors include incorrect names, phone numbers, or addresses.
- Accounts that belong to someone else with your name or a name that sounds similar to it
- False accounts due to identity theft.
You should update your basic personal information whenever you relocate, change your name, or get a new phone number. It will help to reduce unknown errors.
Reporting of account status
Among these are mistakes in the status of loans and other financial accounts. It might comprise:
- Open accounts reported for closed accounts.
- You are listed as the account’s owner in reports when you are merely an authorized user.
- Accounts that have been falsely identified as past-due or overdue.
- Inaccurate last payment date, opening date, or first delinquent date.
- Multiple listings for the same debt.
These mistakes may occasionally cause accounts to report you as the account owner even though you are only an authorized user. In any case, these mistakes could have a significant impact on your credit score.
Balance errors
These inaccuracies comprise reported accounts with the wrong balance or credit limit. Your ability to get a loan may be impacted by how this affects your credit utilization and debt-to-income ratio.
- Inaccurate account balances
- The wrong credit limit on certain accounts
Data management errors
These mistakes include accounts listed more than once when a debt is assigned to collections while the actual deficit is still documented at the initial lender. These double-entry results happen frequently.
A different kind of data management issue occurs when incorrect information that has already been rectified reappears in the credit report.
- Adding inaccurate information back in after it has been changed.
- Accounts that repeatedly appear and list various creditors.
Disputing errors on credit reports
The main concern is how to fix credit report errors. So, when you download a complete credit report, there will be instructions on contesting credit report errors. To overcome incorrect information, use these guidelines.
- Reach out to the credit reporting company and the company that provided the information to discuss errors on your credit report.
- Inform the credit bureau over the phone or online regarding the error. You might also write a letter or an email. However, your credit report must include the credit bureau’s contact details.
- For disputing errors on credit reports, describe the error and why it is a mistake. Provide information to support your claim.
- If the credit bureau needs to get in touch with you, include your contact information.
- Get in touch with your financial organization and ask them to give the credit bureau accurate data.
- Ask your credit bureau to add a fraud alert to your account if you think you may be a prey of identity theft due to the mistakes in your credit report. This will inform the lenders if someone attempts to misuse the account, forcing them to take further precautions to make the account more secure.
- Once you notify the credit bureau of the mistakes, your dispute will be looked at, and any necessary corrections will be made after the investigation.
The procedure for dealing with these requests will vary depending on the financial institution.
Conclusion
Everyone aspires to have an excellent credit score. That is why everyone tries to continue to pay our bills on time, maintain a strong credit profile, and keep credit utilization modest. But all of these will be useless if credit report inaccuracies are ignored. Two things are crucial to maintaining your financial stability regarding your credit report: examining it repeatedly and working to raise your credit score.
Even minor credit report errors can significantly impact whether you are approved for a loan the next time you apply. So, you should rectify errors as quickly as you can. There are more ways besides fixing errors to raise your credit score. Not all ways to increase your credit score involve removing mistakes. Paying off debt might significantly boost your financial situation and also enhance your score.