How to Fix The Most Common Credit Report Errors

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How to Fix The Most Common Credit Report Errors

How to Fix The Most Common Credit Report Errors

How to Fix The Most Common Credit Report Errors - PinterestDid you know that a large proportion of consumers have errors on their credit reports? Unfortunately, it’s true. In 2017, the most common complaint received by the Consumer Financial Protection Bureau (CFPB) had to do with incorrect information being reported on consumers’ credit reports.

A study conducted by the FTC in 2012 found that about 25% of consumers had at least one error on one of their credit reports. Some of those consumers were paying higher interest rates on loans as a result of those errors bringing down their credit scores. 

From this information, you can see that it’s all too likely that you may have an error on your credit report. Let’s go over some of the most common types of credit report errors and how to fix errors on your credit report.

How to Get Your Credit Report

The first thing you will need to do in order to identify errors on your credit report is, of course, obtain a copy of your credit report

You can get your credit report for free from annualcreditreport.com, which is the only website authorized by the government to provide your annual free credit report.

You are legally entitled to receive one free credit report from each of the three major credit bureaus once every 12 months. You can choose to order all three credit reports at the same time or order each individual report at different times throughout the year.

Watch out for other websites claiming to offer free credit reports or free trials, especially if they ask you for payment information.

Inspect your credit report regularly to catch errors early.

Inspect your credit report regularly to catch errors early.

However, there are some reputable websites where you can view your credit report for free, such as CreditKarma, CreditSesame, WalletHub, and Bankrate. They are able to offer this service by advertising credit products to users.

You can also request a free credit report if you are denied credit because of information found in your credit report. The credit report must be from the credit bureau that provided the original report to the lender. 

In addition, you can qualify for an additional free report if you are unemployed and planning to apply for jobs, if you receive government assistance, or if you are a victim of identity theft.

Credit experts recommend checking your credit reports at least once a year, so make sure to take advantage of any opportunities to get a free copy of your credit report.

You can also pay to get your credit reports directly from the credit bureaus. 

Types of Credit Report Errors

Identity Errors

If there are accounts in your name that you didn’t open, your identity may have been stolen.

If there are accounts in your name that you didn’t open, your identity may have been stolen.

  • Your personal information is not accurate. For example, your name is misspelled or your address is incorrect. This is an indication that the credit bureau may be confusing you with another person. This can sometimes happen with family members who have similar names or live at the same address.
  • Your file has been mixed with someone else’s. If you see accounts on your credit report that belong to someone else who has a similar name or the same address, this could mean that your credit report has been merged with another person’s report due to having similar personal information.
  • There are accounts that you didn’t open. Accounts that you know you didn’t open but are listed in your name indicate that someone has stolen your identity and used it to fraudulently open accounts. 

Account Information Errors

  • Accounts are reported more than once (duplicate accounts). Sometimes, the same account may be shown twice on your credit report. This can definitely hurt your credit if it’s a derogatory account that’s been duplicated. 
  • An account reports that you are the primary owner of the account when you are actually an authorized user (or vice versa). It’s possible that the credit bureaus have mixed up who is the primary owner of the account. 
  • Closed accounts are reporting as open (or vice versa). Sometimes, accounts that you have closed in the past will still be reporting as open. This can be problematic especially if it’s a negative account, such as a collection. On the other hand, if an open account is reporting as closed, that’s also a problem because it can hurt your utilization ratio.
  • There are late payments on your report, but you were on time. Late payments are highly damaging to your credit score, so if you’ve never been late paying your bills but your credit report indicates otherwise, that’s an error you’ll want to correct as soon as possible.
  • An account has an inaccurate open date or date of first delinquency (DOFD). If an account has an incorrect open date, this could change the age of the account, which could, in turn, impact your credit score. An incorrect DOFD on a derogatory account, such as a collection account, will affect when the negative mark falls off your credit report.
  • Accounts show incorrect balance or credit limit information. Some credit cards do not report a credit limit at all, which could hurt your credit utilization ratio. Alternatively, your credit report may not be showing the correct balance or credit limit, which could also potentially hurt your utilization.

Clerical Errors

  • Inaccurate data was added back into your credit report after being corrected. If you’ve corrected an error on your credit report but then see the same error pop back up again, it could be a clerical error on the part of the credit bureaus or the data furnisher.
  • Duplicate collection accounts with different debt collectors are all being reported as open accounts. As we explained in our article on collections, this situation is called “double jeopardy” on your credit report. If an account has been sold to a debt collector, there may legitimately be multiple accounts for the same collection on your credit report, but the original account should be updated to show that it has been transferred and should no longer show a balance owed. The collection agency that currently owns the debt should be the only entity reporting the collection as open with a balance owed.
  • There is negative information on your credit report that is more than seven years old. Negative information must be removed from your credit report seven years after the date of first delinquency, so if any derogatory information on your credit report is older than seven years, you can have it deleted.
To get the best results, write a letter for each dispute and send your letters by certified mail.

To get the best results, write a letter for each dispute and send your letters by certified mail.

How to Fix Errors on Your Credit Report

If there are any errors on your credit report, you can contact the credit bureau that is reporting the inaccurate information to resolve the issue. Your credit report should contain information on how to file a dispute. 

Although it is possible to dispute credit report errors online, many credit experts recommend instead writing a letter and sending it in the mail with documentation to verify your identity and evidence to support your claim. If you try to dispute online or over the phone, you may not have the chance to provide enough supporting evidence, and the credit bureau may dismiss your dispute as frivolous.

The Federal Trade Commission offers a guide to disputing errors on credit reports and a sample FCRA dispute letter for consumers to use as a guide during the dispute process.

If there is more than one error on your credit report to deal with, it is best to send a separate letter for each dispute, since the credit bureaus may reject long lists of disputes as frivolous. It’s also recommended that you send your letters by certified mail so that you have proof that the letters have been received.

Annotate each error in your credit report and provide documentation supporting your dispute.

Annotate each error in your credit report and provide documentation supporting your dispute.

If you have a lot of errors to dispute or if you have been the victim of identity fraud, you may consider hiring a credit repair service to assist with the process. [Disclosure: This article contains affiliate links.]

In addition, it might also be a good idea to contact the credit bureaus to place a fraud alert on your account, which requires lenders to take extra steps to verify your identity if someone is trying to open an account in your name. (If you are planning to buy tradelines, be sure to have the fraud alert removed first.)

Once the credit bureau has received your dispute, they have 30 days to investigate your claim. If their investigation cannot verify the information on your credit report, they must update it with accurate information or delete the item.

You should also contact the lender that furnishes the data to the credit bureaus to ensure the inaccuracy gets corrected at the source. The FTC also provides a sample dispute letter to send to data furnishers. If you neglect this step, the error could show up on your credit report again the next time the lender reports to the credit bureaus.

What To Do If You Disagree With Dispute Results

If your dispute is rejected and you don’t agree with the credit bureau’s decision, you have the option of adding a consumer statement to your credit report to explain the situation. However, this is not necessarily the best solution.

Firstly, the statement doesn’t get factored into your credit score, so it won’t help your chances when a lender uses an automated system to approve or reject applicants. If it’s a case where an underwriter is looking at your credit report, adding a consumer statement may just draw their attention to a negative item unnecessarily, especially if the item is older.

Another option is to submit a second dispute with additional supporting documentation to try to get the credit bureau to investigate the dispute a second time.

Conclusions on Credit Report Errors

Unfortunately, errors on credit reports are very common, so we all need to be vigilant about monitoring our credit for fraud and inaccuracies.

Make sure to check your credit reports regularly by claiming your annual free credit reports as well as using a reputable free service throughout the year. As soon as you spot any errors, try to get to the bottom of them and get them corrected both with the credit bureaus and with the data furnishers as soon as possible.

By making sure that your credit report only contains accurate and timely information, you are helping to protect your financial health and ensuring that credit report errors don’t stand in the way of future opportunities.

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