It might come as a surprise to some, but errors on credit reports are remarkably common. In fact, it’s estimated that at least 10% of all credit reports contain errors of one kind or another, with the potential side effect of having a demonstrable impact on your financial standing through your FICO score.
Here are some of the more typical problems you might find on your credit report
Incorrect information
If you have a common name (e.g. Jim Brown), you might find your name has been misspelled. Your telephone number, address or social security number might also be incorrect. More troubling are errors where you might be named as the sole owner of a particular account/debt, when you’re actually just an authorized user or co-signer of that debt. These are all errors you need to remedy as soon as possible.
Other People’s Debts
Identity theft is a growing problem in the United States and elsewhere in the world. It involves somebody stealing some of your personal information to create a fake identity with. They then use this alternate identity to run up debt in your name, often to the tune of tens of thousands of dollars. Resolving this type of error will require the help of law enforcement, and the credit reporting bureaus too.
Ex Partner
Because we live in a society where being burdened with debt is considered to be the norm, it’s quite possible that you have a debt listed on your credit report in the name of an ex-spouse or partner. You might have co-signed for this debt in the past, but you need to make sure your ex is still paying their part of it, otherwise your FICO score will suffer.
Outdated Financial Information
Another nasty surprise for some people is to find that they have the same debt listed multiple times on their report, often because the debt was originally owned by one lender but then sold to a debt collection agency. You might also find that your credit report lists debts which have been cleared or closed by you, and significant errors in the total balance of specific loans or finance agreements. Other errors can include incorrect credit limits, or incorrect account numbers listed on your report.
Delinquent Accounts
Your credit report might also include information on delinquent accounts you’ve already actioned, but the account still shows as being in arrears. Debts of this type can have a serious negative impact on your FICO score because they allude to the fact that you’re not paying back your existing debt. Sometimes delinquent accounts can have an incorrect date on them or sometimes indicate that the debt is still due when you’ve already cleared it. Other errors can include an incorrect date for when you made your last payment, or when the debt itself first became delinquent.
Errors on your credit report are something you should take care of immediately, and this is done by contacting the leading credit bureaus, including Experian, Equifax, and TransUnion. Remember that lenders and finance companies refer to your existing credit report before they’ll provide you with another line of credit.
All credit reporting agencies have steps in place for any of the above errors, but you do also have the right to file a dispute with them if they don’t correct these errors within a reasonable timeframe.