How to Spot and Fix Errors on Your Credit Report

We might believe that the major credit bureaus keep the tightest and most up-to-date records of our credit profiles. However, according to a new Consumer Reports investigation, more than one-third, or 34 percent, of Americans found at least one error on their credit report.

Unfortunately, while mistakes do happen, a single error on a credit report might be preventing you from obtaining a higher score. A lower-than-expected score might mean a higher interest rate on a loan or credit card, or the denial of credit altogether. Indeed, ensuring that all of the information contained in your credit reports is accurate is key to presenting yourself in the best possible light to lenders — not only when it’s time to apply for loans or credit cards.

Typical Errors on a Credit Report

There are several types of errors that might appear on a credit report. Let’s have a review of a few of them.

Negative items that should no longer appear

You may have paid a bill late or maxed out a credit card years ago. While such negative behaviors might occur from time to time and do appear on a credit report, these items should no longer be affecting your credit report after a certain amount of time.  See below how long certain actions take before they are no longer affecting your credit. (Source: CNBC.com)

• Bankruptcy: 6 years or longer.
• Missed payment or default: 18 months.
• Maxing out a credit card: 3 months.
• Closing an account: 3 months.
• Applying for credit: 3 months.

Clerical or administrative errors 

There could be inaccuracies on your report due to clerical or administrative errors, such as someone else’s information being inadvertently added to your file. Or, perhaps you opened up accounts using a different name, and that older information was not added to your account under your current name.

Fraud 

Unfortunately, identity theft might not be discovered until you pull your credit reports and discover that several credit cards or loans had been taken out in your name that you never authorized. This is an increasingly common fraud tactic: scammers open up credit cards in your name and even pay the minimum payments without your knowledge. 

Why Errors Exist

There are several reasons why inaccuracies or inconsistencies might occur, apart from clerical errors or fraud.

Reporting of data

Not all of the credit bureaus receive the same information equally. Because the information on your credit report is supplied by lenders, collection agencies and governments (i.e., courts) — each of whom may have a different reporting relationship with the bureaus — there is most likely a variation in the information contained in the separate credit reports. 

Timing of inbound reported data

Even if the bureaus obtain the same information, they may not receive it all at the same time. As a result, one bureau may not have the most complete information on your credit history.

How to Dispute Errors

The credit reporting agencies must investigate the items in question within 30 days. In fact, the Federal Trade Commission encourages you to do this. 

Contact the credit bureaus

You would need to dispute the mistake with each credit bureau. Unfortunately, each bureau would need to be contacted separately, if the same error appears repeatedly. (If it’s fraud or identity theft, you only need to contact one of the three bureaus, as by federal law, that bureau must report the fraud to the other two.) Provide as much information as possible about the error, including copies of documents to support your claim. Use the credit bureau’s dispute form if possible and keep records of everything you send.

Contact the business or lender

You might also wish to contact the business or lender that supplies information to the credit bureaus to ensure that all of your information is updated. This could be a secondary tactic to ensure that information remains correct moving forward, as the business must let the credit bureau know about your dispute.  

SmartCredit’s Action Button allows you to communicate directly with the source and skip the bureaus to fix the issue. Learn more about SmartCredit features like this.

Sources:

Federal Trade Commission – Disputing Errors on Your Credit Report

CNBC.com – Here’s How Long It Takes To Improve Your Credit Score

CNB.com – A Third of Americans Found Errors in Their Credit Reports

Consumer Reports – More Than a Third of Volunteers Found Errors in Their Credit Reports