Your credit report holds important information about your credit accounts’ status, credit activity, and loan payment history, and common errors in those reports can impact your credit score. Handling your credit accounts responsibly and making timely loan payments adds points to your credit score. Irresponsible handling of your credit accounts and late loan payments deducts points from your credit score. 

Lenders go through your credit report to help them decide whether or not to loan you money. Your credit score also affects the interest rate that lenders will offer you. Errors on your credit report will cause your credit score to drop for no fault of yours. A poor score acts as a red flag, which can affect several aspects of your life.  

Consequences of Errors In Your Credit Report

Credit card errors could cause a lot of financial damage by way of lowering your credit score. 

A lower score affects your ability to get a credit card or any type of loan – personal, home, or vehicle. Even if you do get approved, you’ll pay a higher interest rate and more fees. 

It could also become an obstacle to getting a job or promotion at certain companies. Larger organizations check prospective employees’ credit score to ensure that they are financially sound and reliable. 

Even opening accounts with utility companies will become more expensive as the provider will ask you for a larger deposit. A low score could also limit your options when looking to rent an apartment. Potential landlords will check your score to make sure that you’ll make the rent payments on time. 

With poor credit, you’ll pay a higher premium on your car insurance too. 

Checking your credit report regularly is the only way to avoid paying the price for common credit report errors that are no fault of yours. 

Common Credit Report Errors To Look For

Errors in credit reports are, unfortunately, quite common. These may occur in the form of accurate reporting, incomplete information, or identity theft. 

These are some of the more common errors on credit reports: 

Identity errors

• Incorrectly recording your identity information – name, birth date, Social Security number, email address, phone number, residential address
• Mixing your account with another person with the same or similar name as yours in a single file 
• Inaccurate accounts resulting from identity theft

Balance Errors

• Inaccurate current balance in accounts
• Incorrect credit limit listed against account

Reporting account status inaccurately

• Closed accounts reported as open and vice versa
• You’re wrongfully reported as the owner of the account when your real status is an authorized user
• One or more payments are inaccurately reported as late or delinquent
• Date of last payment or date of first delinquency inaccurately reported
• Incorrect account opening date
• One debt listed multiple times under the same or different names

Inaccurate data management 

• Reinsertion of wrong information after it was corrected
• Accounts listed multiple times with different creditors listed (commonly occurs in the case of accounts in collections or delinquent accounts

What To Do If You Find One Or More Credit Card Errors

All consumers are entitled to dispute errors on credit reports and get their credit scores restored. 

If you find any incorrect information, you must take steps immediately to get the mistakes corrected. Start by filing a dispute with the relevant credit bureau and the company that furnished the wrong information. Your credit report will have details on how to dispute incorrect or incomplete information. 

Your dispute letter must be accompanied by some supporting documentation and information including: 

• Your complete name, which should be the same as on your credit report
• Your Social Security number, phone number, email address, and residential address
• Explain in detail which information you’re disputing, making sure to identify the correct account numbers involved 
• Provide the correct details and request that the inaccurate information be corrected or deleted
• If you’re disputed some incomplete details, request that the complete details be included in your credit report
• Highlight the section on the credit report that you’re disputing and enclose a copy of the report with your dispute 

When sending supporting documentation, do not send the original receipts or documents. Send copies and keep the originals with you. You don’t want the originals getting lost in the mail. 

Keep copies of your dispute letter and all the enclosures. 

Identity Theft And Your Credit Report

When checking your credit report, look for strange credit card accounts in your name and large purchases that you don’t remember making. Identity thieves steal your information and apply for credit cards that they use for large purchases. Those bills go unpaid because you’re not aware of them but the delinquency gets reported on your credit report. This hurts your credit score and hampers your ability to get low-cost credit in the future. Moreover, you’ll also have to deal with bill collectors. 

The federal government has established a one-stop resource – IdentityTheft.gov. At this site, you’ll find lots of useful information on how to report identity theft and how to recover if you’ve been a victim. 

The only way to get this corrected is by checking your credit report and filing a dispute against these wrongful entries. In this case, you should file the dispute directly with the concerned consumer credit reporting company.  

What Happens After You File A Dispute? 

When you file a dispute, the credit bureau is obligated to investigate the errors. They do this together with the person/entity that provided the information. One of two outcomes can result from this investigation. 

1. The consumer reporting company may determine that the dispute is unfounded. In this case, the company should send you a notice within 5 days informing you about their determination. They will also have made a decision not to investigate the dispute further.
   
2. The consumer reporting company determines that the dispute is not frivolous and there is an error on your credit report. In this case, they will correct the information and notify you as well as all the credit bureaus about the corrections. The credit bureaus will then update your credit report with accurate information.

It’s rare but it can happen that the furnisher does not update or delete the information even after determining that the dispute is valid. If this happens, you should inform the credit bureau. The credit bureau can’t change this information from their end but they can add an explanatory statement to your credit file. Potential lenders, credit card companies, employers, and landlords who request your credit report will be able to read this statement. 

When To Check Your Credit Report For Errors

It’s a good practice to check your credit report at least once a year. You can get one free credit report every twelve months from each of the three credit reporting companies – Experian, TransUnion, and Equifax. Application forms at available at AnnualCreditReport.com

As a temporary measure, due to the economic uncertainty resulting from the pandemic, all three consumer reporting companies are offering free online weekly credit reports. 

In addition, you must also check your report before taking a large mortgage or vehicle loan. You want to make sure that your credit score is reflected accurately so you can get the lowest possible interest rate you qualify for when borrowing money. 

Other times to check your credit report are before applying for a new job and before looking for a place to rent. Click here for tips on maintaining good credit!