The Five Most Common Credit Report Errors
The Big Three credit bureaus - Equifax, Esperion and Transunion - all use different methods to determine credit scores, often resulting in mistakes such as false delinquencies or accounts that don’t belong to you. These are enough to result in a denial of credit to someone with an otherwise fair credit score - and a poor credit score can prevent you from getting a job or paying higher insurance rates.
The Five most common credit mistakes are:
1. Mixed or mismerged files: Mixed or mismerged files occur when credit information relating to one person is placed in the file of another, thus creating a false description of both people’s credit histories. Mismerging occurs most often when two or more people have similar names, Social Security Numbers (SSNs), or other identifiers (for example, when information relating to Jane A. Doe is put in Jane B. Doe’s file).
Mixed files occur largely because the credit bureaus computers do not use sufficiently rigorous criteria to match consumer data precisely, even when such unique identifiers as SSNs are present. For example, credit bureaus will include information in a persons file even when the SSNs do not match, but other information appears to match. Thus, they have been known to mismerge files when people have similar names and share seven of nine same digits in their SSN.
2. Identity Theft: Identity theft is the fastest growing crime in this country and presents a serious source of inaccuracies in the credit reporting system. But are you aware that credit bureaus - due to their loose matching procedures are to blame for a significant part of identity theft? For example, if an impostor has only adopted the victim’s first name and SSN but not his or her last name or address, the algorithm used by the credit bureaus to “merge” information often will incorporate the impostor’s information into the victim’s file at the time the credit bureau compiles the report. Once the fraudulent debt is reported, often after default and non payment, and especially when collectors begin attempting skip trace searches, the account ends up merged into the victim’s file even though many of the identifiers do not match.
Banking business practices are also to blame, with low security controls in place for the granting of credit. Most people can open credit cards over the telephone, without ever requiring written consent making it easier for criminals to impersonate you.
3. Information provider errors: A significant source of errors in credit reports is inaccurate information provided to the credit bureaus by information providers. Information provider inaccuracies primarily fall into two categories types:
a. Reporting your accounts with an incorrect payment history, current payment status, or balance.
b. Attributing someone else’s account to you, who does not owe the debt, often called an “ownership dispute.” This often involves a spouse or other authorized user who is not contractually liable on the account.
Any error sent by the information provider in its computer file will automatically appear in your credit report, even if the information clearly contradicts information appearing in other parts of the same credit report.
4. Re aging of old debts: “Re aging” occurs when collection agencies / debt buyers purposefully misrepresent the date of delinquency to fall within the seven year period. The collection agencies will now re-activate old and nearly worthless debts with the simple act of false credit reporting.
FACTA attempted to address re aging by requiring debt collectors to use the date of delinquency used by the creditor, 15 U.S.C. S. 1681s 2(a)(5)(B).
Despite this change, re aging abuse continues.
The FCRA requires most consumer debts to be deleted from a credit report after seven years from the date of charge off or 180 days after the delinquency.
15 U.S.C. S.1681c(a)(4) and (c).
5. Missing credit limits: Withholding credit limit information or not reporting your credit card limits by credit card companies has a serious impact on your credit score. The ratio of credit used to the amount of credit you have available makes up 30% of your score. So if your credit limits are not being reported, your credit score is being affected negatively by as much as 30%! A Federal Reserve Board study indicates about that 46% of consumers have at least one revolving account in their credit files that does not contain information about the credit limit. That’s almost 1 in 2 of every person with a credit history!
If the scoring system sees only one balance and no credit limit that is counted as a maxed out card. For an example, if you have a $3,000 Credit Card and that credit limit is not reported, and you charge $1,000 which is way below your 70% requirement, the scoring system does not see your $3,000 limit and interprets your $1,000 as being maxed out. This will lower your score. Call your credit card company immediately and ask them to start reporting your credit limit
Now you know what the five most common errors in credit reports are. Have you checked your credit report lately?
This post was brought to you by The Ultimate Credit Ebook – How to Raise your Credit Score by up to *200 points.. available at http://www.ultimatecreditebook.com. Subscribe to our newsletter for free credit score tips and information. Backed by a Money-back guarantee - sample chapters include 10 easy steps to Credit Repair, Effective Sample Letters that work, How to Get Inquiries removed from your Credit Report, Ruthless Debt Negotiation and much more…
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Raise Credit Score | How to Improve your Credit Score
Are you aware that a poor credit score can:
- Prevent you from applying for a job - employers often check credit reports before hiring, especially in the financial industry or if you will be handling money
- Starting a business - you will be ineligible for trade lines from suppliers or credit lines from a bank
- Obtain utilities in your name - cable, telephone, electric and gas companies may require a co-signer, or require a hefty “deposit” upfront
- Buy a house or rent an apartment - bad credit will mean a higher interest rate or a larger security deposit
The following steps and advice will show you how you can raise credit score or improve your credit score.
Improving Credit Score
- Always, and I mean always, pay your bills on time. Paying the minimum amount due on credit cards will help you avoid late fees - but you should always pay more than the minimum due, better yet you should pay off the entire balance if you’re able. Also send in your payments BEFORE the due date, to avoid late payments. Here’s an automated checking and savings account that will help you make those payments on time
- Get a copy of your credit report. You need an accurate picture of where you currently stand credit wise. The only way you can do that is by obtaining your credit score for a fee from the three major credit bureaus, along with copies of your credit reports. Yes you can obtain your credit reports from free from the federal government sanctioned website www.annualcreditreport.com - but your credit reports will not contain your credit scores. The best way to obtain your credit scores from all three bureaus along with your credit reports is from MyFico. Click here to get your reports and credit scores from MyFico
- Check your credit reports for errors. If you find any incorrect information, such as wrong names, wrong account numbers, wrong addresses, wrong loan amounts - you should dispute these items and have them removed.
- Close all your old accounts. If your credit report shows an account that you no longer have a credit card for, call the credit card company and ask them to close that account. Do not cut up or throw away any existing credit cards! You need that credit history.
- Reduce your debt to income ratios - as a rule of thumb, do not use more than 35% of your available credit limit
- Keep your balances low - better yet always try to pay them off in full and avoid carrying balances from month to month. The balances you carry over are costing you in terms of the interest you pay
- Consolidate your credit card debt and move them to a lower interest rate card
- Stop applying for more credit cards
- Ask your credit card companies to correctly report all your accounts to the credit bureaus. Some credit card companies do not report your accounts to the credit bureaus, and this will have a negative impact on your credit score because it will seem like you are using more credit than you really are.
- If you know that you will have some difficulty making an upcoming payment, contact the creditor beforehand and work something out. Coming to an arrangement with your creditor will help you preserve your credit rating. A number of creditors have programs to assist you - but you have to ask for assistance.
All the steps above can be completed under a month and you should notice a considerable increase in your credit score.
This post was brought to you by The Ultimate Credit Ebook – How to Raise your Credit Score by up to *200 points.. available at http://www.ultimatecreditebook.com. Subscribe to our newsletter for free credit score tips and information. Backed by a Money-back guarantee - sample chapters include 10 easy steps to Credit Repair, Effective Sample Letters that work, How to Get Inquiries removed from your Credit Report, Ruthless Debt Negotiation and much more…
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