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Millions of Credit Reports Have Errors

CNNMoney reports that as many as 42 million Americans have errors on their credit reports, according to a Federal Trade Commission study of around 1,000 participants and 3,000 credit reports.

creditreport-1 Your credit report contains information about how you pay your bills, have filed for bankruptcy, where you live and whether you’ve been sued or arrested. Credit reporting companies sell the information in your report to creditors, employers, insurers, and other businesses that use it to evaluate your applications for credit, insurance, employment, or renting a home.

For the rest of your life, whether you think it’s right or not, most every time you apply for any type of financing or credit, someone, real or just a computer, will take into consideration the quality of your credit based on these credit reports.

I have gone from no credit to excellent credit to horrible credit and back again in the past 30 years or so.  If your credit is not that great, you can always make it better.  The first step is to make sure there are no errors on your reports.

The federal Fair Credit Reporting Act (FCRA) was enacted to help promote the accuracy and privacy of the information in your credit files.

Some financial advisers and consumer advocates suggest that you review your credit report periodically. Why?

ž   Because the information it contains affects whether you can get a loan — and what it will cost to borrow money.

ž   To make sure the information is complete and accurate before you apply for a loan for a major purchase like a house or car, or buy insurance or apply for a job.

ž   To help guard against identity theft. That’s when someone uses your personal information to commit fraud. Identity thieves may use your information to open a new credit card account in your name. Then, when they don’t pay the bills, the delinquent account is reported on your credit report. Inaccurate information like that could affect your ability to get credit, insurance, or even a job.

You can get your credit report for free each year.  The three nationwide credit reporting companies have set up one website, toll-free telephone number, and mailing address through which you can order your free annual report. To order, visit annualcreditreport.com, call 1-877-322-8228, or complete the Annual Credit Report Request Form and mail it to:

Annual Credit Report Request Service

P.O. Box 105281

Atlanta, GA 30348-5281

…Do not contact the three nationwide credit reporting companies individually.

It’s pretty easy to order your credit reports, all you need to provide is your name, address, Social Security number, and date of birth. If you have moved in the last two years, you might have to give them your previous address.

To maintain the security of your file, each nationwide credit reporting company may ask you for some information that only you would know, like the amount of your monthly mortgage payment or a car payment. Each company might ask you for different stuff because the information is often different on the different reports.

You are also entitled to a free credit report if you apply for credit and get denied.  You are then allowed to request a credit report to see what the problem was.

Another reason to check your credit reports is to make sure you are not the victim of identity theft.  It is possible that someone can steal your identity, open a credit card account and go on a spending spree, and you might not find out for over 3 months.

If you do find errors on your credit report here are a few steps to take in order to resolve the problem.

Get proof of the error: This usually comes in the form of a letter from the creditor admitting the mistake. It’s best to have this letter or letters in hand when you request a re-score.

  • Immediately tell the credit bureau agency in writing about any information you believe is inaccurate.
  • Also consider trying to correct credit report errors online. Some credit bureaus offer this service.
  • Keep in mind that results aren’t guaranteed – removing an error may or may not help your credit score.

The FTC says only 5% of consumers have an error so serious that it would result in a financial setback, such as a loan rejection or higher interest rate payments. However, with 200 million Americans covered by the three agencies, that means 10 million people could be adversely affected.

That’s a bunch of people, get your credit reports and make sure you are not one of the 5%.

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