In 2013, the Consumer Financial Protection Bureau received more than 24,000 consumer complaints regarding credit report issues. Some 73 percent of those complaints dealt with credit report errors. Even a small inaccuracy on a consumer’s credit report can have long-lasting negative effects.
Errors can affect our ability to obtain credit, interest rates, auto insurance rates, employment opportunities, security clearances, the ability to rent a home or apartment, etc.
You can protect yourself by simply reviewing each of your three free credit reports – from Experian, TransUnion and Equifax – on an annual basis. When reviewing your reports, you should look for several things.
First, you need to make sure that only accurate information is on the report. It’s very common for credit reports to contain errors. Some errors may lower your score and prevent you from obtaining credit, for example, a home loan. You also will want to make sure that all of your accounts are included and that payments have been properly recorded. If you have always paid on time, you shouldn’t see late payments being reported. Inaccurate information can be disputed.
Second, you should review your reports so that you will know what lenders will see when you apply for new credit or a new job, or try to renew a security clearance. This will give you some time to clean up any errors and/or prepare answers to any questions a lender or other official may have about information contained in your report(s).
Finally, you should review your reports, at least annually, to protect yourself from identity theft or fraud. You should look for any credit or collection accounts that are not recognized.
You also should review inquiries to see if your credit report was viewed by creditors you did not authorize. Note that sometimes creditors will look at your credit report for preapproval credit offers. If you see this type of inquiry on your credit report, but you didn’t open a preapproved account, be sure to check the account section of your credit report to see if an account was opened.
It’s also important to review the personal information section to see if there are any names, addresses or phone numbers that you do not recognize.
If you suspect identity theft or fraud, you should notify the three main credit reporting agencies and have a fraud alert placed on your file. You also should notify local law enforcement.
In today’s economy, it’s critical that credit reports are accurate. You can do this by obtaining your free reports and reviewing them on an annual basis. Unfortunately, according to the CFPB, only one in five Americans actually obtains and reviews their free credit reports.
If you would like help with understanding, disputing or managing your credit and credit reports, contact Financial Readiness, at 772-5196 / 2919 / 8526 / 0745, and set up an appointment for one of their credit repair clinics.
In addition, you can obtain your free credit reports online at www.annualcreditreport.com
or by phone at 1 (877) 322-8228. Note that this is the only legitimately free place to receive a copy of all three of your credit reports.