Credit report errors can lead to bad credit, block access to loans

Credit report errors: Who’s affected?

Do you check your credit reports regularly? A bad credit report can ruin your financial life.

If you aren’t keeping an eye on your credit reports, you run the risk of bad credit. Errors can creep into your credit report, cost you good rates on house and car loans, and prevent you from getting credit cards and other necessities Creditors can pull existing credit if you are reported as having bad credit.

Equally alarming, 35% of companies say they use credit reports to determine whom they will interview for jobs, reasoning that bad credit signals a potentially troublesome employee.

Not all credit report errors are due to identity theft. Credit bureaus sometimes mix two credit files that have similar names or Social Security numbers or accidentally duplicate account entries. Creditors sometimes make mistakes when reporting a new account to a credit bureau. Occasionally, responsibility for an account may be misrepresented; for example, an authorized user may be listed as an account owner.

If you spot an error, you must take immediate action before repercussions follow. Look for:

• Accounts belonging to another person
• Closed financial accounts reported as open
• Reports that you own an account when you are just an authorized user
• Accounts incorrectly flagged as late or delinquent
• Incorrect date of last payment, date opened or date of first delinquency
• The same account listed more than once, possibly with different names
• Accounts with incorrect balances
• Accounts with incorrect credit limits

About 79% of all credit reports contain errors, according to CBS News, and more than half of those reports include incorrect Social Security numbers, inaccurate birth dates, inaccurate spouse information or an old address. Name mix-ups are common, and addresses are sometimes mingled, as in the case of a divorced couple who may find their spouse’s credit history reported as theirs.

Credit scores and your finances

You cannot escape a credit report if you have ever had a credit card or purchased a car or house. If you “buy now, pay later,” you have three credit reports compiled by three companies. These companies get their information from lenders, credit card companies, insurance companies and others with whom you do business.

Lenders use these reports to decide if they will do business with you and determine what interest rates they will offer you. Credit card companies also use them to determine your credit limit. If you rent, your credit report is screened before you are accepted as a tenant, and insurance companies make decisions about coverage based on the report.

Those who use your reports are probably not looking at the details; their computers are fixated on the credit score each of the three bureaus — Equifax, Experian and TransUnion — has assigned you. Your scores are based on:

• Payment history (35%)
• Amount owed (30%)
• Length of credit history (15%)
• How much new credit you have recently acquired (10%)
• Credit mix (10%)

These credit scores are your Fair Isaac Corp., or FICO, score. Fair Isaac Corp. is an analytics software company founded in 1956. The scores are rated:

• 800-850 — excellent/exceptional
• 740-799 — very good
• 670-739 — good
• 580-669 — fair
• 300-579 — very poor

The scores move frequently depending on how you’ve been spending and borrowing.

Banks sometimes provide credit scores as a service. You can see your annual scores for free through the credit bureaus, one of several requirements imposed on the bureaus by the Fair Credit Reporting Act (FCRA) and related legislation. The FCRA also stipulates that:

• Information cannot be provided to others without a specific reason
• Disputed information must be investigated
• Consumers must be warned that a bad credit report has harmed them
• Records must be accurate

Equifax, Experian and TransUnion have a centralized website, toll-free telephone number and mailing address through which you can order all three reports at once: 

• Visit AnnualCreditReport.com
  • Call 1-877-322-8228
  • Complete the Annual Credit Report Request Form and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281

Check credit reports often

Although you don’t compile your credit report, you are responsible for paying your bills and seeing that your information is correct. It is best to check your credit report often because errors can be financially fatal.

With some 30,000 data processors filing 4.5 billion updates to credit reports each month, CBS News reports, mistakes happen.

In reporting on errors, NerdWallet learned that some omissions are intentional. Some banks said they do not furnish complete information on their customers because it is too costly and complicated to do so, even if the information would improve their credit score.

Are you sure your landlord and its collections company are telling the credit bureaus that you’ve never missed a rent payment? Not all do.

Not always a quick fix

Fixing a credit report isn’t easy, and fixing it quickly can be problematic unless you know the steps and proof you need and have the time to track down the information required. With so much at stake, you may want to consult a lawyer or join a class action lawsuit filed by consumers in similar situations.

Join a credit report errors lawsuit investigation

If you have found or think there might be errors on your credit report, you may qualify to join a credit bureau lawsuit investigation and seek compensation. 

Please fill out the form on this page to see if you qualify for a FREE case evaluation.