Do you know, according to a recent study, that one in five credit reports contain
errors? This week I want to talk through how to determine if your report is one of
them and, if so, what to do about it.
Considering what’s at stake — your ability to obtain a loan, the interest rate you can
qualify for, maybe even your chances at landing an apartment or job — it’s more
important than most people realize.
The Basics – Your credit score is based on factors like how often you seek credit,
how much debt you take on, and whether your bills are paid on time. Scores range
from 300-850; the higher the number, the less risky you appear to lenders.
Each of the three credit reporting agencies (Equifax, Experian and TransUnion) uses
a different reporting model and will likely issue a different score. For that reason,
it’s important to check all three credit reports.
How to Check – I recommend obtaining a free credit report from
www.annualcreditreport.com. Each reporting agency grants you one free copy per
year. Review it to ensure everything is accurate and up to date. Doing so is also a
good way to guard against identity theft. If someone is out there using your name on
a credit card, the evidence will likely show up on your credit report.
If you’re new to reviewing these reports or could use another set of eyes, contact
your financial institution. At CommunityAmerica, we sit down to review credit
reports with members all the time and, if necessary, help them put a plan in place to
improve their credit score.
If You Find an Error – Don’t freak out. Call the credit reporting agency that issued
the erroneous report and file a written dispute. Be ready to provide the necessary
documentation. For example, let’s say your credit report reflects a late payment that
you know you made on time. Find the statement with a date on it.
Consumer reporting companies must investigate any items in question (usually
within 30 days) unless they consider your dispute frivolous. Reporting agency must
give you the results in writing and a free copy of your report if the dispute results in
a change. They are also required to notify the other two credit reporting agencies so
they can correct the information in your file.
Improving Your Score: It can’t be done overnight, but several things can improve
it over time. Pay your bills on time. Keep new credit requests to a minimum. Pay
off your current credit card balances or keep them as low as possible. http://
companies ask for upfront fees, just walk away. However, there are some reputable
organizations that can help you repair your credit, if doing so yourself is too difficult
or time intensive. Just make sure whatever fees they charge are due after the service
If it’s been a year or more since you’ve seen your credit report, do yourself a favor
and check it at your earliest convenience. If nothing more, it will give you peace of
mind that you’re error-free and that you’re getting the credit you deserve.
Kat's Money Corner is posted on Dollars & Sense every Tuesday. Kat Hnatyshyn, when not blogging or caring for her little one, is a manager with CommunityAmerica Credit Union. For more financial chatter, click http://twitter.com/savinmavens.