Getting turned down for a loan? Paying higher interest rates? It could be due to mistakes on your credit report. And the negative consequences don’t stop there.
Credit report errors are the top consumer issue filed with the Consumer Financial Protection Bureau, and the problem is getting worse. Complaints have more than doubled in just two years.
Common errors include inaccurate personal information, duplicate accounts, closed accounts reported as open, and paid-off debt appearing as unpaid.
“A credit report is like an X-ray into a person’s finances! And having incorrect information on that report can stop a person from getting credit or a loan, renting an apartment, getting a good rate on your insurance, or even getting a job,” said Consumer Reports’ Lisa Gill.
You can get your credit report for free — every week — from each of the major bureaus at AnnualCreditReport.com.
If you do end up finding an error, fix it right away. You’ll want to file a dispute with each of the three credit bureaus: Equifax, Experian and TransUnion.
“Include all the evidence you have, like account statements and payment records. Create a paper trail by writing a detailed letter of explanation and send all of these via certified mail and keep copies for yourself,” Gill said.
It’s something Nestor Vargas had to do. Back when he was in college, he got a surprise trying to buy a car.
“I went to go apply for a loan, a car loan, and I was denied because they found an unpaid bill,” Vargas said, knowing he had never missed a payment. “I was shocked, I went to the credit report bureaus, and I put in a claim knowing that it was inaccurate.”
Vargas is now a financial planner and says to make it easy for yourself by checking your credit report often.
“Put it on your phone to remind yourself just like you go for a checkup to your doctor, you have to check your credit,” he suggested.
Consumer Reports says adding a note to your credit report file can provide context for future lenders, employers or landlords, potentially improving their perception of your financial situation.