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Millions of Americans Were Recently Reported to have Credit Report Errors – Are you one of them?

7 June 2013 3 Comments

canstockphoto13046863A recent study by the Fair Trade Commission found that as many as 42 million American have at least one error on their respective credit reports. In case of 13 million Americans, the errors were serious enough to lower their credit rating. Considering that the credit score is the basis on which Americans are granted loans and mortgages worth hundreds of billions every year, this means that Americans are collectively losing out on billions of dollars in extra payments they have to make for credits that are issued at higher interest rates.

If you are one of those Americans who are affected by such errors, you need to read on to find out how to fix these errors. But first, let us first have an overview of the credit report system as it is in the US.

An Overview of Credit Report and Credit Report Agencies in the US

A credit report for a consumer contains more information than just about their transactions. It also contains their habits with regard to how frequently they are delayed in their payments for their various loans or credit bills. Therefore, banks and other lending institutions are interested in the credit history of a prospective borrower before they would give out a loan to him or her.

That is where credit bureaus come in – these are agencies or companies that keep track of a credit score for every credit card that they track. There are a number of such companies in the US, but the big three are Equifax, Experian and TransUnion.

Credit bureaus do not get their data necessarily from the issuer of the credit card; rather, they get and collect a lot of data from different types of lenders, retailers, public records in the form of court records, and debt collection agencies, among others. Therefore, to form the credit history of a single person, a credit bureau may have to collect information from hundreds of sources. It is not surprising, therefore, to find that these credit reports are as error-prone as reported in the new study.

It may not be surprising, but it is definitely unprofitable for you to continue to have errors in your credit report. Therefore, you should follow the steps mentioned below to fix your credit errors.

How to fix Errors in your Credit Report

The big three credit bureaus track almost all credit cards in the US, so if you want to see your credit report, you may have to ask all three of them for a report. Every American with a credit card can ask for a free annual credit report from all credit bureaus from the site http://www.annualcreditreport.com/. Therefore, you should ask for a free report for your credit card, and go through the reports to make sure that they have not made mistakes while recording your transactions.

If you find or think that one or more bureaus have made a mistake, then, under Fair Credit Reporting Act, you are allowed to file a dispute with the bureaus concerned. Under the act, the bureaus are also obligated to respond to your dispute within 30 days, or a reasonable time.

It is seen that only one in five Americans see it fit to go through their annual credit reports from the bureaus, even when the service is essentially free. The rest of four in five Americans are at the risk of paying thousands of dollars extra in mortgage and other type of interest to their lenders. Therefore, it is essential that you check your credit report every year for errors, and see that your credit score is being fairly recorded.

3 Comments »

  • Jay S. Fleischman said:

    One thing to note is that if you have a dispute with the credit reporting agency, that dispute should be in writing by mail rather than doing it online. When you dispute online, you may (depending on the credit reporting agency) be surrendering some of your legal rights. In addition, when you send the dispute you should keep a copy of the letter and send it certified mail, return receipt requested to prove delivery. This will come in handy in the event that the errors aren't corrected.

  • ecutek gt-r said:

    yes I were affected once….
    Thanks for sharing the tips for fixing the errors.

  • KC @ genxfinance said:

    That would be a pain if there are any errors in your credit report. I agree that you need to do something about it asap because you may not know how far the effect can go.