These 7 credit report errors can ruin your credit score
By Allie Johnson
October 12, 2015
Just like going to the dentist, it’s best to check your credit reports regularly to prevent costly fixes down the line. But where can you get your reports and exactly what should you be looking for?
Every year, you can get a free copy of your credit report from each of the three major bureaus — Equifax, Experian and TransUnion — at AnnualCreditReport.com.
Instead of getting all three reports at once, most personal finance experts recommend downloading your report from a different bureau every four months. For example, you could check Equifax in January, Experian in May and TransUnion in September.
“It’s a good way to keep an eye on things throughout the year, and it ups your chances of catching fraud,” says Beverly Harzog, a consumer credit expert and author of “The Debt Escape Plan.”
But how exactly should you check your credit? Here are seven items to zero in on in your credit reports:
- Your personal information. Start by going over the basics, such as your name, address and Social Security number. Little mistakes, such as a wrong digit or a slight name misspelling could be a sign that your credit file could be mingled with someone else’s. A “mixed file,” in credit industry lingo, can occur when two consumers – for example, a father and son – share a similar name and possibly other identifying information, according to Experian. A mixed credit file can drag your score down if your namesake is less creditworthy than you. If you suspect a mixed file, contact the credit bureau.
- Accounts you don’t recognize. Go through the list of accounts and make sure those credit cards, auto loans, personal loans and mortgages actually belong to you. If you find an account you don’t recognize, contact the creditor for more information, the Consumer Financial Protection Bureau recommends. In some cases, the account might be yours. If you have a retail credit card, for example, the name of the bank that issued the card might not ring any bells for you, says TransUnion Senior Vice President Ken Chaplin. If the account truly isn’t yours, though, that could be a big red flag for new account fraud, a type of ID theft in which a crook takes out new credit in your name. Or, it could be yet another sign of a mixed file.
There are so many ways errors on your credit report can mess up your credit score.”
a consumer credit expert and author of “The Debt Escape Plan”
- Closed accounts listed as open or vice versa. This is a common error on credit reports, according to the CFPB. If you spot this type of error, contact both the creditor and the credit bureau to request a correction, the CFPB recommends.
- Balances and credit limits. Check the balances and credit limits listed on your credit cards and other accounts. A balance that’s wildly off from what you expect could signal a mistake or a problem – for example, maybe an authorized user went on a spending spree with your credit card. Amounts won’t always match up exactly because your most recent credit card payments or purchases might not be showing up yet, Harzog says. However, an error, such as reporting your credit limit as lower than it really is, can hurt your credit score. Such a mistake could change your credit utilization ratio, making it look as if you’re using more of your available credit than you are.
- Negative items. Take a close look at any negative items on your credit report because they can have a big impact on your credit score. Negative items typically include late payments, bankruptcy, charge-offs, collections and judgments. Make sure they’re accurate and also check details such as dates and amounts. Most negative items stay on your report for seven years, and it’s a good idea to make a note of when each one should be gone. That way, you can strategize on timing if you plan to apply for a mortgage or car loan, Chaplin says.
- Good accounts that are missing. Is there anything that should be on your credit report that isn’t? Maybe your Dad added you to his credit card as an authorized user to help build your credit, but the account isn’t on your report. This isn’t common but can happen, credit expert John Ulzheimer says. Creditors don’t have to report accounts, and some don’t report authorized user accounts, he adds. If this happens, call the creditor to ask that the account be reported, which may or may not work.
- New credit inquiries. On your report, you may also see a list of creditors who made hard inquires — meaning you applied for credit, a loan or maybe even a cellphone contract, which required a credit check, Chaplin says. If there are any you don’t recognize, investigate to make sure you did apply for credit with that lender, Chaplin says. Spotting the name of, say, an auto lender when you’re not shopping for a new car could be a sign that a fraudster tried to get credit in your name.
Not all inaccuracies need to be addressed. For example, where you worked five years ago might be listed on your credit report as your current employer. Your employment information should get updated the next time you apply for new credit and provide your current details to the new creditor, who may then report that information to the credit bureaus, Chaplin says. Credit bureaus aren’t required to investigate certain types of errors, including incorrect employment information, according to the CFPB.
If you want to dispute an error on your credit report, contact the credit bureau that supplied the report, explain the problem and include copies (not originals) of any documents that help prove your case, the CFPB recommends.
You shouldn’t take mistakes lightly because they can affect your ability to get credit and the amount of interest you’ll pay on any future loans or lines of credit. “There are so many ways errors on your credit report can mess up your credit score,” Harzog says.