We all make mistakes.
It’s true: we do all make mistakes. Maybe we turned left when we should’ve turned right, or we put too much salt in the potatoes; perhaps we even locked ourselves out of the house more than once… or twice. However, these kinds of mistakes don’t have an effect on things as important as our FICO® Scores or the interest rate we pay on a loan. But credit report errors can cause lasting effects, which is why it’s so important to keep an active eye on your credit reports from all three major credit bureaus.
A Federal Trade Commission study1 found that 1 in every 5 American consumers has an error in his or her credit report. The report also discovered that 5% of these consumer credit reports have an error so serious that it creates overcharging for credit card debts, auto loans, insurance policies and other financial obligations.
How do credit reporting errors occur?
There are numerous ways that mistakes can find their way onto a credit report, but for now, we’ll discuss 4 top causes:
Sometimes you have to complete a credit or loan application by hand and it’s difficult for someone to read your handwriting. The “4” looks like a “7” or the “L” looks like an “I”. This may lead to incorrect inputting of information, which can then be passed along to a credit bureau. There might also be times when you might be inconsistent with the information you submit on an application – such as past addresses or phone numbers. If these types of mistakes happen, try contacting the financial institution to which you submitted the application. The lender may then contact the credit bureau with updated/corrected information.
Financial Institution Mistakes.
Lenders and creditors enter data for hundreds to thousands of consumers each day. Somewhere along the line, a mistake can happen. The mistake might be made while a person is entering an application, or it might be made while submitting information to a credit bureau. However, once the error is made, regardless who is at fault, it will probably be responsible for disputing the credit report error with the credit bureau.
Credit Bureau Mistakes.
If the error wasn’t caused by you or the institution submitting information to the credit bureau, it might have occurred at the credit bureau itself. These credit bureaus collect and handle millions of pieces of data, which creates the possibility of human and/or technological error. In such cause, it’s important to dispute the error as quickly as possible, before it impacts your credit in negative ways.
You’re the only one who can know if someone has stolen your identity and is using it to open accounts or make purchases in your name. While reviewing your credit report you might see a credit card you never applied for or a bank loan you never obtained. If these kinds of anomalies appear on your credit report, it’s very possible you’re a victim of identity theft. If that is the case, learn everything you can about reporting identity theft, as well as ways to help combat it. Stopping the thieves in their tracks could be critical to maintaining a good credit profile.
Disputing credit report errors.
Should you find an error on your credit report, there are two initial steps to take. First: Inform the credit bureau showing the error on its report that there is a mistake, and let the credit bureau know the exact information in question. Details of how to do this and dispute the error can be found here. Second: Notify the lender or creditor that submitted the erroneous information to the credit bureau that you are disputing the accuracy of that information.
It is your right to dispute errors you feel may affect your credit profile and chances of getting a loan or maintaining your credit score. It’s part of the Fair Credit Reporting Act, which you can read about here.
You can read about how others have disputed errors on their credit reports on the myFICO forums.
Latest posts by Rob Kaufman (see all)
- Revolving Credit and Installment Credit – What’s the difference? - October 17, 2017
- The Pros and Cons of Merging Money: Joint Accounts and Your Credit Score - October 3, 2017
- With MyFICO’s Top Finance Calculators, Find Your Strength in Numbers - September 26, 2017
- 7 Credit Myths and Truths From Credit Reports to Credit Scores - September 19, 2017
- 6 Common Credit Terms You Need to Know - September 12, 2017