What is a credit report?
A credit report shows an individual’s credit history over the years. A credit report is generated by the credit bureau where they collect information from the individuals and base it on that.
These reports are of great use for banks or any financial lender so they can access the worthiness of the applicant before granting loan / bad credit loans. Mostly the information collected is of the candidate’s personal detail and their billing details to identify how punctual they are.
How to read a credit report?
A credit report has been divided into four quadrants. In the first quadrant, the individual’s personal details about their purchase history are included. This section can have details like your social insurance number and so on. The second quadrant includes information regarding the trade lines.
Trade lines are the record of activities regarding the credit of an individual.
The third quadrant includes information like bankruptcy or tax liens. Lastly, we have the names of all those who have wanted to see the individual’s credit report.
What are the common credit report errors?
Credit reports are something that all of us ignore, mostly because we are lazy. However, let us assure you that it has errors that can affect you negatively.
According to a study conducted by the Federal Trade Commission, one out of four people have credit report errors that affect their overall credit score. Credit report errors can be fixed, that is a sigh of relief for you readers!
There are many credit report errors but your focus should be of the following three:
Inaccurate Account Information:
Sometimes the report lists accounts that are not yours. Sometimes payments can be charged off your credit cards too and that is due to inaccurate account information.
Incorrect personal details:
The first quadrant of the credit report has personal information of the individual. This can include social insurance number, date of birth, address, or name. Many times individuals find errors in this section. These are easily corrected mistakes but this can cost the individuals a very hefty price. With the crime rates increasing, it is possible that some people steal others identity and you could get involved in this case.
Fraudulent Accounts:
Scammers can open new accounts using somebody's name and then abandon when it comes to payment. Once this happens these accounts are placed in the consumer’s credit reports and this can cause them to have bad credit. Fake accounts are hard to clean up, as you do not have any proof to support your innocence.
What is the impact of errors on your credit reports?
- Trouble getting credit
- Impact of living necessities
- Difficult to get a job
Credit Report Review Checklist
It is suggested that people should check their credit report throughout the year so that they can identify the error as soon as possible. Individuals can ask for their free credit reports through Equifax, Experian, or TransUnion.
How to Dispute Credit Report Errors
Errors can be clerical or due to identity thieves, make sure that you do not panic. The three credit reporting agencies listed above have given clear instructions on how to resolve this. All you have to do is be patient and let the magic begin through the course of these six simple steps.
1. Make sure it is an actual error. At times, many clients come up with errors that will not have any sort of impact on them and create a fuss. Make sure that the error your report is crucial for you.
2. Contact the bureau that has reported the error. The individual should have a copy of the letter for themselves too as it will help them have a stance if taken to court.
3. Stay calm and wait! These bureaus are very busy as they have other people to take care of too. The best you can do is stay calm and patient as they are not fast at what they do. It takes a month or even more to get an official response.
4. Is the resolution satisfactory? Once you receive the resolution, make sure that the error has been corrected otherwise a series of actions can be taken up.
5. Reiteration. You need to check all of your reports for errors. All your reports maybe fixed but one may not be and that can be an issue. Repeat the dispute process again with the other agencies.
6. Lastly, follow up! Just because you think the error has been sorted, there is a possibility that is not true. At times, the agencies continually make the same error repeatedly. Recheck your reports.