Your credit is the key that can either open or shut the door on certain aspects of your financial future. If you want to keep your credit healthy, it will be necessary to order a copy of your credit report each year and to thoroughly review it for errors. And if you do find errors, it’s important to take action and correct them as soon as possible.
“To ensure that the mistake gets corrected as quickly as possible, contact both the credit bureau and organization that provided the information to the bureau. Both these parties are responsible for correcting inaccurate or incomplete information in your report under the Fair Credit Reporting Act,” said myFICO.
Here are three common credit reporting mistakes that you should be aware of.
1. Negative information and accounts that don’t belong to you
Be on the lookout for entries that belong to another borrower. It could be someone else’s loan or credit card. Whatever it is, make sure to call the lender as well as all three credit reporting agencies to correct the inaccuracy. This is one mistake you’ll need to keep a very close eye on because certain errors could impact your credit score significantly. For example, if you had a credit score of 780 and someone else’s bankruptcy is listed on your credit report, this could cause your score to drop by roughly 220 points. Be aware that this particular error could possibly indicate identity theft.
“Lenders use the information in your credit report—like the type of accounts you have open, your available credit, and your payment history—to assess your risk as a consumer, so it’s important that your report contains current and accurate information. Staying up to date with your credit report and score could also help you detect identity theft or fraud before it gets out of hand, wreaking havoc on your finances—and your emotional state… If a credit card you have not opened is listed on your credit report, your identity may have been stolen and used to open new lines of credit,” warns Equifax.
2. Incorrect name
If you live in the same household with someone who has your name (for example, you are a father and your son shares the same name), make sure there has not been a mix-up. When two people’s credit information is found on one credit report, this error is known as a mixed credit file. Sometimes a Jr. and Sr. will have mixed files.
“…Be consistent and thorough in providing identifying information. I recommend using your full, given name as it appears on your birth certificate, even if you don’t like it. If your name includes a generation, always use it, even when you are the senior. If you don’t use your full given name, always use the same nickname. For instance, if your name is Robert David Smith, but you prefer Bob, always use Bob Smith when you apply for credit. Don’t use Robert on one application, Bob on a second, David on a third and Dave on yet another. Also provide all of the identifying information asked for on your application, including your complete address, previous addresses, birth date, and Social Security number…The more pieces of identifying information that can be matched, the less likely a problem with mixed information will occur,” suggests Experian.
3. Old accounts
Negative items should be removed from your credit report after a set amount of time. For example, late payments and foreclosures stay on your report for seven years. A chapter 13 bankruptcy will also remain for seven years and a chapter 7 bankruptcy filing will remain for 10 years. If you notice that a negative item has not been removed after the required amount of time, you can dispute the entry. The Fair Credit Reporting Act gives consumers the right to dispute inaccurate and incomplete information. The quickest way to do this is through an online dispute process. Equifax, Experian, and TransUnion all have this option.