If you’ve ever tried to finance a car or buy a house, you know how important your credit report is. Good things happen when you have good credit.
You may get better interest rates and more favorable credit terms. You may even be able to put down less money for a down-payment if you have good credit.
But what happens if your credit score is low because of a mistake? If you are willing to invest a little time, it is possible to rid your credit report of errors. Read on to find out how!
What is a Credit Report?
A credit report is often thought of as a report card that reflects how well someone manages their credit. It will show any debt that you are carrying, how often you pay your bills and any public history that you may have, such as a bankruptcy or a judgment.
While there are several credit reporting agencies, the three biggest bureaus include Experian, Transunion, and Equifax. These credit reporting bureaus analyze your credit history numerically, giving you a score ranging between 300 and 850. The higher your score, the better your credit.
Credit reports are used by banks, lenders, and landlords to evaluate whether or not they should extend credit to you. If you are applying for a job, a prospective employer may review your credit report as part of their hiring process.
Under the Fair Credit Reporting Act, a credit bureau cannot report information that is not accurate. If a consumer disputes information on a credit report, the bureau must investigate the complaint and remove information they find to be incorrect. Below are common errors that can be found on a credit report.
Late payments are often reported to the credit bureau. These nasty late payments can wreak havoc on your credit and stay on your report for up to seven years. Creditors can make mistakes. Perhaps your payment was posted to someone else’s account? Or maybe it did arrive on time but was reported as in late in error. Either way, if you paid your bill on time, and can prove it, here are a few steps that you can take to fix your credit report:
- Pull your credit report from all three of the credit reporting agencies to see which ones are showing the payment as being late
- Reach out to the creditor and explain the situation. Ask them if they can contact the credit agency to remove late payments. If you can get them to confirm this in writing – that’s even better.
- Dispute the claim with the credit reporting agency. Even if the creditor is willing to contact the agency, you should dispute the claim in the meantime
Fixing your credit report can take time. Wait a few weeks before pulling new credit reports. If you don’t see the matter fixed, you may need to contact the creditor and credit reporting agency again.
Not Your Account
Companies that report your credit activity to the credit bureau can make mistakes. Errors in names or social security numbers can result in someone else’s delinquent account showing up on your credit report. Having a delinquent account on your credit report that isn’t yours can adversely affect your overall credit score. Be sure to dispute accounts that aren’t yours immediately with the credit bureau to have them removed.
In other cases, your credit report may correctly show that you owe money to someone, but the balance owed may be incorrect. Or, a credit card company could make a mistake when reporting your total credit line. If you have a loan, you may see errors in the terms or it could be showing as past-due when that is not the case.
Filing a Dispute
When you find an error in your credit report, it’s important to dispute this as soon as possible. It can take a few weeks for the credit bureau to address your complaint.
If you wait or ignore the error, you put yourself at risk of having a lower credit score than you should. This could impact your ability to get a loan or rent an apartment until your report is fixed.