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|Common Credit Report Mistakes Could Cost You
If you haven't requested a copy of your credit report, there are many reasons why you should.
A 2004 study--the most recent available--by the National Association of State Public Interest Research Groups revealed that almost 79% of all credit reports contain some type of error. One-fourth of credit reports contain such serious errors that those individuals could be denied credit.
What are the common errors?
- 1) Misspelled names
- 2) Wrong Social Security numbers
- 3) Inaccurate birth dates
- 4) Inaccurate information about a spouse
- 5) Out-of-date address
- 6) "Closed" accounts listed as "open"
- 7) The same mortgage or loan listed twice
- 8) Absence of major credit, loan, mortgage, or other accounts that could be used to demonstrate creditworthiness
How can these errors happen?
Most mistakes can be pinned to creditors who provide inaccurate information to credit bureaus. Mistakes happen when credit accounts change hands. Other mistakes simply are human error. One report found that some banks admit to not providing credit bureaus with complete information about their customers. Some errors are the result of thieves stealing your personal information and establishing fraudulent accounts in your name.
Why should you care?
Lenders use credit reports to determine the interest rates on loans; the more creditworthy you appear on paper, the lower the rate you pay. Errors may cause you to pay more. In some cases, you even could pay a higher premium for auto and homeowners insurance, because insurance companies have found that people with poor credit histories tend to file more claims. And many people are surprised to learn that a potential employer turned them down for a job because of negative information on their credit report. Federal law, however, requires that the employer get your permission before pulling your report.
How much does a credit report cost?
Federal law requires each of the "big three" credit reporting agencies—Experian, Equifax, and TransUnion—provide consumers with one free credit report per year. Go to annualcreditreport.com, or call 877-322-8228.
How much does a credit score cost?
If you want your credit score, a three-digit assessment of your creditworthiness, you'll pay approximately $15. You may see higher prices for a credit score, but the higher price probably includes credit reports. Remember: You're entitled to one free credit report per year from each of the credit reporting agencies, so watch out for so-called deals you may not need.
What if you find an error in your credit report?
Write a letter to the credit bureau, which is obligated by law to contact the creditor who supplied the disputed information. The credit bureau must respond to you within 30 days. If you're not satisfied with how the dispute is settled, ask that a brief written explanation be added to the bottom of your credit report.