A third of Americans found errors in their credit reports. How to fix these errors
kate_sept2004 | E + | Getty Images
Before you take out a mortgage or car loan, check your credit report.
There may be a mistake that could cost you.
It’s not as unusual as you might think. More than a third, or 34%, of Americans found at least one error in their credit report, according to a new study by Consumer Reports. Consumer Reports asked volunteers to get copies of their credit reports and check for errors, and 5,858 did so between February 1 and April 1.
Twenty-nine percent found errors in personal information and 11% found errors in account information.
Mistakes about personal information can’t harm your creditworthiness, but they can make your credit report difficult or impossible to access, said Syed Ejaz, an analyst at Consumer Reports. However, mistakes in account information can damage your creditworthiness.
More from Invest in You:
To get a low mortgage rate, your creditworthiness is important. Here’s how to boost it
How parents issue stimulus checks to their children
How to resist the urge to splurge on a post-pandemic shopping spree
This three digit number has a direct impact on your ability to obtain credit, e.g. B. a mortgage and what interest rate you will be paying.
“Unfortunately, sometimes people find out way too late when they are getting a loan for a new house or car,” said Ejaz.
“So it’s really important that you check your credit report and verify that it is correct.”
The Consumer Data Industry Association, which represents the major credit bureaus Equifax, Experian and TransUnion, issued a detailed statement in response to the results of Consumer Reports. It called the story “completely wrong and misleading” and said the industry has an accuracy rate of 98%.
“Accuracy is the bedrock of the credit reporting industry and providing the right consumer credit report is our primary concern,” the statement said.
Consumer Reports isn’t the only organization reporting bugs. A 2012 study by the Federal Trade Commission found that 25% of Americans had an error in their credit reports.
The best way to keep track of your credit reports is through AnnualCreditReport.com. While Equifax, Experian, and TransUnion are typically available free of charge once a year from each reporting company, they offer free weekly credit reports through April 20, 2022.
Courtney Keating | Getty Images
If the error is in your personal information and is preventing you from accessing your credit reports online or over the phone, write a letter directly to the reporting companies, advised Ian Lyngklip, an attorney at Lyngklip & Associates Consumer Law Center in the greater Detroit area.
Make sure you include appropriate ID, such as your driver’s license, and proof of address such as a bank or pension statement. You can black out any financial information, he said.
If you have any other mistakes, you will have to go to any credit bureau to have them corrected. Explain in writing what needs to be repaired and why – and include the account number. (Here is the sample letter from the FTC.)
Make sure to include your full name and address, along with the credit reporting agency’s dispute settlement form, if any, and a copy of the credit report with the item circled or highlighted. It’s also important to provide copies of documents proving your claim, such as credit card or bank statements, and to keep a record of your shipments.
The reality is, it’s really, really, really hard to get your credit report repaired.
Managing Director of the Federal Association of Consumer Protection
Also notify the company and send them the same information. (Here is the sample letter from the FTC.)
The FTC recommends that all materials be sent by registered mail so that there is a paper route. The credit bureaus have approximately 30 days to investigate your claim. You will also forward your evidence to the company that reported the information and they will have to investigate and report.
The credit reporting agency must provide you with the results in writing and a free copy of your credit report if the dispute results in a change. If your dispute is not resolved, you can request that an explanation of the dispute be included on your file and in future reports.
If you lose the dispute, you can resubmit it, but be sure to provide additional information, Consumer Reports recommends. Simply submitting again could automatically deny the dispute.
You can file a complaint with the Consumer Financial Protection Bureau website if your second attempt doesn’t work, recommends Consumer Reports. If the problem is severe, consider hiring an attorney who specializes in the field. You can find one on the National Association of Consumer Advocates website.
At the end of the day, challenging your credit report is not an easy process.
“In reality, it is really, really, really difficult to correct your credit report,” said Ira Rheingold, managing director of the Federal Association of Consumer Protection.
This is because the credit reporting system was not designed for the benefit of consumers. It was built for the companies that use it, he explained.
“There is nothing in our credit reporting system that makes it easy, consumer-friendly or helpful for consumers,” said Rheingold.
SIGN IN: Money 101 is an 8-week financial freedom learning course delivered to your inbox weekly.
CHECK OUT: 4 content generating sideline jobs that can generate passive income, with tips from the pros about Growing with acorns + CNBC
Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns.