Most everyone realizes that some
credit reports may contain errors, but did you know that according to some
experts, as many as 80% of credit reports could contain errors.
Many different types of
credit report errors have been found on consumer credit
reports.
These errors include personal identifying information, account information, missing
and/or cross reporting.
While some errors may not create problems for you, some can. There are many
different types of credit report errors and most may not be recognized as any more
serious than others, but all errors can impact what someone sees when reviewing
your credit report,
how your credit report is used, and how well your credit report works for you to
accomplish your financial goals. For example, as discussed,
credit scores are based on the information found on a credit report.
When a credit report lists erroneous information it can affect your credit score
and as a result, affect your ability to get credit and/or preferred interest rates
and terms.
Specific errors will impact your
credit report in various ways. Personal identifying information, such
as name, current address, date of birth, or social security number may be entered
inaccurately and continue to list in error on a credit report with the potential
to limit the ability of a lender to recognize you when you apply for credit.
Errors in account information, in particular credit limit, balance, terms or status
(including delinquency, public records, or judgments), carry a substantial negative
impact due to the influence or weight in determining your
credit score. Other errors that can influence your credit report and
credit score include timeliness in removing old information, missing information
from accounts with good repayment history, or cross reporting - when someone else’s
information appears on your report.
It is largely due to error frequency on
credit reports that its recommended a six-month timeline in
monitoring credit reports. Through frequent monitoring of your credit
report you are able to file complaints to correct errors in a timely manner.
In addition, active credit report monitoring is the most effective means available
to screen for identity theft. Timely action on suspicious activity on a credit
report is essential for effective resolution to the problem.
Some consumers may ignore or decide that the issue of
credit report errors is not
a priority for them. Some may decide it would be more convenient to hire a
company to monitor the report for them. Rest assured there are numerous companies
willing to do this for you. However, use extreme caution if shopping for a
monitoring company. As always, research not only the cost, but also the company’s
history and how they will use your personal information as well. There are
companies who will offer to correct information or remove derogatory items from
your credit report.
As a smart consumer, you know that accurate derogatory information will not be removed,
and that some of these companies’ suggestions to you (for example, obtaining a new
social security number for this specific purpose) are illegal. Consequently,
active monitoring
and careful review of your credit report is no longer a luxury for most consumers,
but rather a smart way to ensure your credit report works for you in your efforts
to achieve your financial goals and make smart financial decisions.