Credit Tip Tuesday #58 7 Credit Report Errors That Can Smash Your Good Credit History

What’s the best thing you can have in your life? Financial stability. 

Do you agree? Surely, you do. But, to have financial stability in your life, you must ensure you’re putting in enough work into it.  

For instance, you can get a credit card, improve your credit score, maintain a good credit history, pay your bills on time, etc.   

However, sometimes, despite doing everything, you can still see yourself struggling with making ends meet and getting good rates on insurance or loans.   

What could the reason be? Bad luck? Evil spirits? Ill-fate?  

Well, the sole cause might be right in front of you. Or, to be precise, right in your credit report. Yes! Ever heard of credit report errors? 

Let’s find out what these are and how they can harm your financial stability. 

Disclaimer: We have also listed steps to help you deal with credit report errors correctly! 

Importance Of Checking Credit Report 

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Your credit report should be error-free and accurate, showing your credibility to the lenders, banks, and credit firms.  

However, sometimes due to wrong input, your credit report might have some errors that can ruin your potential of getting loans or affordable insurance rates.  

Here are some convincing reasons why you should review your credit report and check credit score often: 

• As per the Federal Trade Commission report, almost 5% of credit card owners find errors in their credit reports. 
• A wrongly entered credit account may show up twice in your credit report, thus increasing your credit debt value and decreasing the chances of a good credit score.  
• You might have an incorrect ‘late’ or ‘missed’ payment status that can make your loan application seem ‘risky.’ 

So, you may ask what the connection between your financial stability and the credit report is? Well, if we must say it has a complicated status. :p 

7 Alarming Credit Report Errors You Shouldn’t Miss Out 

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Well, every strange and foreign thing on your credit report is alarming. It doesn’t matter if it’s as basic as your name or as big as a duplicated credit account.  

So, you must take every little thing seriously. Here’s what to look out for: 

1. Outdated Data 

A financial literacy survey reveals that almost 30% of people didn’t check their credit reports in a year. So imagine if 2% of the 5% who found credit errors in their report fall in this range with outdated information. 

That seems a lot, right? 

The outdated information can be anything like: 

• A closed credit card that still shows as ‘active’ 
• High debt that has been paid but remains ‘unpaid’ 
• Your build credit from ‘poor to good,’ but the system didn’t update it 
• Incorrect soft or hard inquiry on the report  

Credit bureaus and credit companies frequently update their databases to keep the client information up-to-date, but sometimes a glitch can occur, causing outdated information. 

2. Individual Information 

Personal data is one of the most basic yet essential information on your credit report. But getting it wrong can really ruin your credit history. It includes: 

• Name  
• Contact 
• Residing address 
• Security number 
• Date of Birth 

Here’s what you should look for in your Equifax credit report: 

• A misspelled first, middle, or last name 
• Wrong postal code or phone number 
• Missing current or past address 
• Incorrect verification number 
• False year, month, or date of DOB  

Wrong personal information will make your credit application ‘doubtful’ and ‘inaccurate’ to your lenders. 

3. Clerical Typos 

Your effort to improve credit score efficiently can go to waste if it ends up showing in someone else's credit report. 

Ah, there goes your financial resolution of 2022 to rebuild your credit score. 

But, what could the reason be? A clerical error! Uh, why? Because you got the same name as another client!  

• Clerical typo is often due to two consumers having the same names 
• The personal information is interchanged and shows wrongly on the credit report  

Although it seems like a small mistake, a clerical error may affect your credit history and credit utilization ratio, giving your report a negative mark. 

4. Merged Account Details 

As explained in the above mistake, a clerical error happens due to similar names, which causes the merging of two different account details. Nevertheless, it can also happen due to: 

• Wrong input of name by the consumer 
• Incorrect data entry of security or identity number 
• A false search of an account number (mistakenly typed 2 instead of 3) 

It causes the mixing of two credit reports. However, merging account details is different from identity theft or credit theft. 

According to a legal firm, identity theft is when someone deliberately messes with your credit account and report. In comparison, this file mixing is a technical or clerical error by the credit company or credit bureau database. 

5. Payment Status 

As the name suggests, it involves the wrong status of a payment or transaction in your account details.  

It’s also possible that the transaction you made was a medical bill, but it got swapped with your grocery payment. 

In general, the most common payment status errors are: 

• You paid $14 for a fancy meal, but it says $17 on your credit history  
• Your credit report has a tax payment of $10, which you have no idea about 
• Your account history shows twice the amount you paid at the store 
• You cleared your monthly bill, but it still has a ‘processing’ status 
• You accepted a payment of $100, and the sender got a notification of ‘successful transaction,’ but you never received a penny  

If you don’t review your credit report, all these credit errors will go unnoticed that can harm your credit score and financial stability in the long run. 

6. Wrong Account History 

It can be quite damaging and harmful to your credit score as it involves the involvement of a foreign user.   

For instance, you had a poor score of 570, but you paid your debt, cleared your bills, got a secured credit card, and worked on it to rebuild your score to 650. 

Unfortunately, due to a technical or clerical mistake, the account was wrongly reported to credit bureaus, and your effort went down the drain.  

The worst can happen if the delinquent account is of a person with bad or zero credit history.   

7. Unidentified Credit Activity 

Fraudulent activities are worse if they remain unrecognized because they can be identity theft or credit theft attacks. So, how does it look alike? Let us help you! 

• If your account history shows even a payment of $1 that you didn’t make, it can be a trivial credit theft 
• If you received a notification of account login, but you never made the attempt 
• If you notice a $5 transaction to an unidentified account 
• You have an unknown account under your name that you don’t recognize 

And the best way to avoid credit card fraud is by keeping a close check on your credit report and account history. 

How To Dispute Errors On Credit Report? 

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Fair credit reporting act allows a consumer to stay updated about the right reporting and gives him/her the right to dispute any false activity.  

However, you must ensure that the information you want to dispute is actually incorrect because otherwise, it will only affect your credit history with an inquiry.  

So, here’s what you can do to dispute the credit report errors: 

1. Get help from professionals: If you find the errors confusing or the filing process complicated, you can always seek aid from a credit agency. But, be aware the disputes are usually free of cost so, do your research first before hiring the company. 
2. Ask a credit counselor: It is a person that can help you build a strategy and complete your documents to file a dispute. You must clear any doubt before applying to bureaus. 
3. Dispute errors directly: You can visit the credit bureau (Experian, Transunion, Equifax) branch or submit an online application on their specific website.  
4. Talk to your credit company: You can call your credit organization or visit them in person with the evidence documents and further ask them to file a report. It can be convenient for you as they were the reasons for the issue in the first place. 

Lastly, whichever way you prefer to dispute errors, remember to submit every receipt, document, or picture that can solidify your case of incorrect information. 

Also, remember to wait a few days after the dispute application for the results. 

Bottom Line  

Question: Do you want to enjoy the perks of a stable financial life while getting the best out of the credit rewards, free travel miles, beneficial cash backs, and lots of bonuses?   

Answer: You Must Review Your Credit Report! 

Just like your credit history should be explicitly clear of late, missed, or unpaid payments. Similarly, your credit report must be free of technical and clerical errors.  

This is your only way to survive the credit world while living like a pro!