Protect yourself from credit report errors

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Protect yourself from credit report errors
2 years ago
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It is estimated that around 80 percent of credit reports contain some type of inaccuracy, ranging from the seemingly innocent to the extreme. While it is unlikely that you will be mistaken for someone who is deceased, any error on your credit report can be damaging and potentially deny you access to credit.

One of the most common mistakes comes from simple typographical errors. In a 2004 report, 54 percent of credit reports studied showed misspelled names, outdated information or personal information (address, date of birth, etc.) that belonged to strangers. On the surface, they seem to be innocent but could have major consequences if you are confused with someone who has been irresponsible with their own credit. Even a mix-up as simple as a suffix of Jr versus Sr could cause problems with your credit report.

Many times, the error is the fault of a particular creditor. Consumers have closed accounts only to find at a later date that the creditor never reported the account as closed on the credit report. When other potential creditors view the report, the appearance of a number of open accounts paints the consumer as being overextended. The same can be said of reports that list the same account multiple times.

With identity theft on the rise, many consumers find lines of credit in their name that were opened by unknown third parties. The Federal Trade Commission estimates that as many as nine million Americans have their identity stolen every year. Often, credit cards have been opened in the name of the consumer and have had exorbitant sums fraudulently charged to them without that person's consent. Other times utilities like phone, electricity or cable can be established, leaving an unsuspecting consumer to clean up the damage if the bills are not paid.

A lot of errors can be prevented by simply taking care when filling out credit applications. Verify that your name, address and social security number are printed legibly and correctly. Any misspellings or juxtaposed numbers will end up on your credit report and could lead to issues in the future.

In general, vigilance is the key preventing major problems with your credit report and score. It is recommended that you check your credit report at least once a year. However if you are planning on opening a line a credit - for instance, a credit card, renting an apartment or setting up cell phone service - you should consider checking your credit report 30 to 90 days before filling out any applications. That way, you can be aware of any mistakes that could end up costing you more money.

If you do find errors on your credit report, you should immediately dispute them with both the credit reporting company (usually Experian, Equifax or TransUnion) and the creditor that submitted the information. Start by letting them know which entry or entries you believe are inaccurate. An easy way to do it is to enclose a copy of your credit report with the items in question circled or highlighted.

Once a dispute has been filed, the credit bureaus have 30 days to investigate the discrepancy. Throughout the process, keep detailed records of every piece of communication - phone call, email, fax or letter - you have with the company. It is a good idea to send any letters by certified mail in order to receive a return receipt. Keeping past statements or copies of canceled checks to prove that accounts were paid off will help your claim.

Once you receive a decision on your claim, it does not mean your work is totally done. If you win the dispute, the credit bureaus are required to report the corrected information to all of the national credit reporting agencies. In addition, if there are any credit accounts in good standing that are not listed on your report, you can ask the creditors to include it. It is not required that they do so, but many times, businesses will oblige. The appearance of positive credit items can help boost your score.

If the decision goes against you and the item is found to indeed be a negative mark on your credit, consumers still have options. The first is to obtain the services of an attorney and go to court to dispute the claim. However if you are not willing to go to such lengths to dispute a claim, you can attach a letter of explanation to your credit report. The letter should be sent to all three credit reporting agencies as well as the business in question.

The bottom line is that making sure your credit rating remains strong is your responsibility. But with a little diligence, you can make sure that your credit is where it should be and help keep money in your pocket down the road.

By Marcas Grant
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