Credit Reports Common Errors and How to Fix Them

Today, Let’s look at some common errors on your credit reports and how to fix them.

Credit reports are crucial because they directly impact our financial future.

Whether you’re applying for a mortgage loan, car lease, personal loan, cell phone contract, or any other type of financing, lenders will most likely check your credit before granting you the loan or service you need.

We all know that having bad credit hampers our ability to obtain financing. But what do we mean by “bad”, and how can we improve our credit?

The answer has good credit.

If your credit isn’t so hot right now, not to worry, there are simple things you can do to get it up to par in a few months.

These common errors on your report can harm your credit score and are some of the most common mistakes made when reporting information about consumers.

Let’s review some common errors on your credit reports and how to fit them.

Incorrect Information on Your Report

The most common mistake is incorrect information on your report.

If a creditor reports an incorrect balance, or if you have paid off a loan that still appears on your credit report, if a creditor has the wrong account number listed, or if creditors use a dollar amount instead of a FICO score when reporting their information, your credit report will be inaccurate.

There are many reasons for this, but the result is the same – you could be paying more for credit than you should be because the information on your report is inaccurate.

For example, let’s say you have a car loan with a balance of $5,000. However, the lender reports on your credit report that you owe $10,000.

When you apply for a new car loan, the new lender will see a higher amount, and you will likely have a lower credit score.

If the lender pulls a hard credit inquiry, it will cost you another money and effort so to get your score back up.

An inaccurate credit report can also cost you in other ways. If a creditor reports an incorrect amount on your report, you may have to pay more for credit than you should.

If your credit score is lower than it should be because of the incorrect information on your report, you may not be able to get approved for the loan or credit card you want.

This can affect where and how much money you are willing to pay for a house or car because of your lower credit score.

You have too many late payments

You can have a good credit score and still have late payments on your report. However, too many late payments can cause your score to drop.

Late payment will hurt your score even more than an unpaid bill.

Late payments are a sign that you may not be responsible with credit or money, which a lender will consider when they decide whether to approve your loan.

It is important to keep track of all of your bills and make sure you pay them on time each month. If you have made a late payment in the past, be sure to talk to the creditor about it and explain why it happened.

This can help improve your credit score over time if the creditor reports the correct information to the credit bureaus.

Check Your Credit Reports

If you want to know if any incorrect information is on your report, you need to check your reports to find out.

You have the right to see your three credit reports for free once every 12 months, so be sure to take advantage of this.

Many people make the mistake of not checking their credit reports for years, which makes it difficult to fix any mistakes or inaccuracies.

Another common mistake is checking your report too frequently. If you check your report every month, creditors will see that you are checking your reports frequently, which will negatively impact your credit score.

Erroneous Accounts and Loans You Didn’t Authorize

Another common mistake is when creditors report accounts or loans that you didn’t open or have any knowledge of.

If your car was repossessed and the creditor fails to remove the account from your credit report, it will remain on your report until it is fixed.

The same is true if you took out a student loan and later consolidated it with a loan from another source, but the wrong loan information is reported on your report.

If an account or loan on your report is not yours, report it to the credit bureau that has the account listed on your report. You can do this online.

Confusing Information about Addresses and Dwellings

Another mistake you can make is confusing the address where you live with the address of where you have a mortgage or home equity loan.

Let’s say you have a mortgage on a house in Pennsylvania, and you have a credit card that is reported in Florida. You apply for a car loan in Pennsylvania, and the lender sees the Florida address listed on your report.

In this case, the lender will likely decline the car loan application. The same goes for if you have a home equity loan in one state and a credit card in another state.

The credit bureaus will report the address listed on your report, so be sure that the address is accurate. If the address is not your current address, you can request that the credit bureaus change the address to your current address.

Fixing This Mistake

Double-Check Everything Before You Commit

Before you apply for a new credit card or loan, be sure you have all your ducks in a row.

Double-check the account numbers listed with the creditors, the balance amount and payment amount, and the dates of when you opened the accounts.

The same goes for when you are filling out loan applications. If you are financing a car, for example, be sure to give the correct information about the loan amount, interest rate, and term.

Double-check that the account and loan numbers listed on the application are accurate and that you have the right information in the boxes.

The credit bureaus will report your information to the three major credit bureaus, and creditors will use this information to determine your credit score.

If you make a mistake, like putting the wrong account number on an application, the credit bureaus have ten days to correct the mistake. However, if they don’t catch the error, it will remain on your report.

Make Sure All of Your Credit Cards Are Listed on Your Report

If you have several credit cards, make sure that all of them are listed on your credit report.

If you have a card from one company and a separate card from another company with the same account number, it may look to creditors like you have more debt than you do. 

It’s also important to check that the details of the account are correct, down to the balance amount and payment amount.

The credit bureaus have ten days to update your report when they receive new information from a creditor, so if there is an error on your report, be sure to check it within that time frame.

If you find errors on your report, file a dispute with the credit bureau in question. There is no charge for filing a dispute, and creditors are required by law to investigate any disputes they receive.

You Should Only Report the Amount of Debt You Currently Owe.

If you have a credit card that you have paid off, the credit bureaus don’t need to report the zero balance.

This is because creditors may see your current balance as being higher than it truly is.

Instead, you can ask the creditor to send a letter verifying that you have paid off part or all of your debt and then request that they send this verification to the credit bureaus.

It’s important to be aware of the fact that while paying off your debt will help your score, making more purchases on the account could potentially harm it.

Paying Interest Doesn’t Help Your Credit Scores. Stop Doing It

You may have been told that keeping your credit card balance at a certain percentage will help your credit score.

This is not true. What matters is how often you use your credit cards and how much debt you have compared to your credit limit.

For example, if you have a $5,000 credit limit and have charged $3,000 to your card, your credit score will go down.

Conclusion Common Errors on Your Credit Reports and How to Fix Them

Your credit reports are a snapshot of your past, present, and future finance. The information that creditors report on your report directly impacts your ability to obtain financing.