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One in four credit reports are inaccurate. You heard that right: According to a study by the Federal Trade Commission (FTC), over a quarter of people with credit scores have some kind of error on their reports, ranging from incorrect phone numbers and outdated addresses to erroneously inflated debt and credit inquiries that never happened.
While many of these errors are clerical and may not impact your score, having accurate information in your credit report means you are always getting the interest rates and credit limit you deserve.
Common Credit Report Errors to Look Out For
The following are the top four most common errors that even major credit reporting agencies can get wrong.
Misspelled names, outdated employers, or old phone numbers can all show up on your report, says Bruce McClary, senior VP of communications for the National Foundation for Credit Counseling.
Inaccuracies in your account information like these are the most common, but are also the quickest and easiest to fix with a credit reporting company, he says. They also don’t often impact your credit score. But say you apply for a new credit account. The lender pulls your report and sees contradictory or incomplete information. That could really complicate your application, McClary warns.
Sometimes accounts are listed twice by accident. If you owe money, your credit report could show double the debt, lowering your credit score. You could be denied new credit, or forced to pay a higher interest rate that doesn’t reflect your actual creditworthiness.
Activity you don’t recognize
Maybe you spot a new account that you didn’t open, or some hard inquiries you never made. “That could be an indicator that someone is out there shopping with your personal information,” McClary says. McClary himself has been a victim of identity theft—a bad actor used old contact info to open a cell phone account in his name and ran up thousands of dollars in charges. Fortunately, McClary spotted the activity on his credit report and was able to dispute the charges and shut it down, sparing his credit score from damage.
Unfamiliar activity could also signal that someone else’s account (potentially someone with a similar name) is mistakenly appearing on your credit report. Regardless, it’s worth addressing ASAP.
Incorrect payment history or account status
Sometimes a creditor will incorrectly list a late payment. If you know you paid your bill on time, that’s worth disputing. Similarly, you may have a closed credit card listed as open, or an open account that never got reported. Both could impact your credit utilization ratio (the ratio of your debt to your available credit) which affects your credit score.
How to Order A Free Copy of Your Credit Report
There are three main credit bureaus: Experian, Equifax, and TransUnion. Every year, you can get one free credit report from each through annualcreditreport.com. Usually you can order online, though you may have to order via phone or mail if a bureau has flagged your account for suspicious activity, says McClary.
Jessica Francese, a consumer credit counselor with Debt Management Credit Counseling Corp., recommends cycling through the three bureaus each year, reviewing your credit history every three to four months. (Right now, you can order free reports from all three on a weekly basis until the end of April, a measure put in place during the COVID-19 pandemic.) She especially recommends checking your reports prior to applying for a loan or new credit card, buying a house, or making any other big purchase.
How to Check Your Credit Report for Errors
There are a number of paid services that claim to monitor credit or track down errors for you, but most are a waste of money, says Francese.
“A lot of the scores those services provide are inaccurate,” Francese says. “Each of them has their own different scoring system, so the true FICO score gets lost.” Plus, she says, you can find everything you need to check your own report for free online
First, scan through and make sure you recognize all the phone numbers, addresses, accounts, and other information on the report. Ensure everything is spelled correctly and up to date. (It’s OK if the report has an old phone number or address as long as the right ones are listed as current, says McClary.)
Then, look at your debts and inquiries. Do you recognize the “hard inquiries,” or the inquiries the report thinks you made into new lines of credit? Are each of the listed balances correct? Are there any accidental duplicates?
Stumped by a term? Each of the major credit bureaus has resources online that tell you how to read your credit report, what all the financial vocabulary means, and what items could be negatively impacting your score:
How to Dispute Credit Report Errors
When you spot an error, your first step in the dispute process is to gather documentation, McClary advises. Some commonly accepted documents include:
- A copy of a driver’s license or passport showing your name
- A court document showing proof of a bankruptcy schedule
- A utility bill or other verification of your current address
- A credit card statement or notice you received that shows you paid off a debt
Then, Francese recommends contacting the credit bureau as well as the organization involved in the error about the disputed item. You can usually do this through an online dispute, she says, but when it comes to serious errors like incorrect date of birth or social security numbers, you may have to submit your disputed information and documentation the old fashioned way.
“If [the bureaus] think it’s something fishy, you have to do things by mail,” she warns. “That’s when a lot of people throw their hands in the air and say it’s too tedious, but taking the time to fix those errors is definitely worth it.” (To speed things up, the FTC and Consumer Financial Protection Bureau (CFPB) each provide a sample letter for mailed dispute letters.)
After you file a dispute, the credit bureau has 30 days to investigate, at which point they’ll get back to you with their dispute results and a free updated credit report that reflects any changes, says McClary. He adds that sometimes that first dispute gets denied, but that doesn’t mean you’ve lost.
“Don’t think that’s the end of the road. You can be persistent, and you can dispute it again. Maybe they don’t have all the information they need. If there’s any chance that the incorrect information could cause damage to your credit score or prevent you from qualifying for financing when you need it most, you’re doing yourself a favor by putting in the effort.”
Disclaimer: The opinions expressed by the interview subjects are not necessarily those of Earnest.