5 Common Credit Report Errors
There are five major errors that sometimes appear on credit reports and bring down FICO scores.
Look out for these mistakes when you read through your credit report.
Incorrect Personal Information
If your name, address, or phone number as listed on your credit report are incorrect, they won’t match the correct information you supply on your credit applications.
You’ll want to ensure that your personal information is up to date and let the credit bureau know if any of their information about you is out of date.
Signs of Identity Theft
If you notice drastic errors in your personal information, including strange spellings of your name or a totally different name entirely, you may have been the victim of identity theft.
In extreme cases, you may want to freeze your credit scores and reports by contacting the credit bureaus.
Account Listings and Status
There may be mistakes in the list of your credit accounts that are currently active.
Sometimes closed accounts are still listed as open, or vice versa.
Your credit report needs to be an accurate description of your financial situation.
If an account is no longer open, let your credit bureau know and they’ll update their information.
Large outstanding amounts on your credit cards and loans can lower your credit score.
If you pick up on errors in your account balances, let your credit provider and bureau know right away.
These data entry errors include accounts and credit cards listed on your credit report by accident and spelling errors in your name and address.
Your credit report is an official document - and there is no room for typos.
How to Dispute Information On Your Credit Report
If you’ve read through your credit report and discovered any inaccurate information, you’ll want to have it corrected by the credit bureau.
This process of correction is called a dispute.
You can lodge a dispute online by visiting the Equifax, Experian, or TransUnion websites respectively.
You’ll have the option of lodging an online dispute and/or sending a letter of dispute to the credit bureau by registered mail. This will allow you to be notified when the letter is delivered.
For an example of how your dispute letter should look, you can download this sample letter from the Consumer Finance Protection Bureau.
Possible Dispute Outcomes
After you lodge a dispute, you can follow up on a regular basis to find out the outcome of your request.
The credit bureaus often use the following terms to describe the status of a dispute:
- Updated: The information you disputed has been changed to show the correct version
- Deleted: The information was deleted from your credit record.
- Processed: Your dispute has been processed and your information amended accordingly.
- Remains: The credit bureau has contacted your credit provider and has found that the dispute you lodged was not valid. Your credit report remains unchanged.
How FICO Scores Change After A Successful Dispute Outcome
Merely lodging a dispute won’t increase your FICO score, but if your dispute is successful and negative information is removed from your credit report, your score will probably increase.
Depending on the type of information you’re disputing and how inaccurate it is, you may see a several point increase or even double digits.
This could make an appreciable difference to your FICO score and your chances of successful approval for credit applications.
It’s important to note that removing negative information from your credit report probably won’t boost your FICO score by hundreds of points overnight.
To achieve a truly stellar credit score, you’ll need to make your payments on time, reduce your overall debt levels, and keep those habits up over the long term.
How To Follow Up After An Unsuccessful Dispute
If your dispute wasn’t successful, chances are you have some legitimate challenges to overcome to improve your credit score.
To ensure that your credit score keeps rising, you’ll want to check your free credit report on an annual basis.
Here are some actions you can take to boost your FICO score.
- Don’t pay late or skip payments - delinquent payment always appears on your credit report.
- Don’t borrow too much - try to keep the ratio of your debt payments versus your income at 50% or less. Moreover 30% utilization of your available credit is considered a very good level.
- You may want to consider consolidation or refinancing to make your debt manageable and help you pay it off faster.
- If you really find yourself in an impossible debt situation, credit counseling can help to get your finances back on track and your debts paid off.
Some Last Words
Identifying errors on your credit report and lodging disputes to resolve them is an excellent strategy for credit score improvement.
By knowing what errors to look out for, and by being proactive and contacting the credit bureaus yourself, you’ll be able to raise your FICO score and keep it high over the long term.
This in turn will ensure you have access to credit when you need it the most.