Before you walk into a Vadnais Heights bank to apply for a mortgage or into a Twin Cities area car dealership to buy a new vehicle and get a loan, check your credit report.
It might contain an error that could make it difficult or even impossible to buy a new home or vehicle.
All too common
Credit report errors are more common than most people realize. Slightly more than one-third (34 percent) of volunteers in a Consumer Reports investigation found at least one error on their credit report.
Earlier this year, Consumer Reports asked more than 5,800 volunteers to get a copy of their credit report.
A whopping 29 percent found mistakes in their personal information and 11 percent found errors in their account information.
Doing damage to credit scores
Personal information mistakes typically don’t damage credit scores, but they can make it difficult to access a credit report, while account information mistakes can do substantial damage to a credit score.
A credit score – usually between 300 and 850 – impacts your ability to get loans (such as a mortgage or new car loan) and helps determine the interest rate you’ll pay.
“Unfortunately, sometimes folks find out way too late, when they are in the middle of getting a loan for a new house or car,” said Consumer Reports policy analyst Syed Ejaz. “That is why it is really important to make sure you check your credit report and assess it for accuracy.”
The Consumer Data Industry Association lashed out at Consumer Reports’ findings, calling the investigation “false and misleading,” insisting that the credit reporting industry has an accuracy rate of 98 percent.
Importance of staying informed
Experts say it’s important for consumers to stay informed about their credit scores. The three major credit reporting companies – Equifax, Experian and TransUnion – are providing free weekly credit reports through April of next year.
If you stay informed about your score, you can catch errors before applying for a loan, credit card, a new job, etc. While it’s not difficult to find a mistake in your credit report, the same cannot be said of fixing the error.
No easy task
“In reality, it is really, really, really hard to fix your credit report,” Ira Rheingold, executive director of the National Association of Consumer Advocates, told CNBC.
He said the credit reporting system was built for the convenience of the companies that use it, rather than for consumers.
“There is nothing about our credit reporting system that makes it easy for consumers, friendly to consumers or helpful to consumers,” he said.
Fixing the errors and stopping the damage
Account information mistakes must be disputed in writing (the FTC recommends using certified mail) with each of the three credit reporting companies. You should notify the business of the error as well.
CNBC notes that if you can’t get the errors fixed by yourself, consider contacting an attorney experienced in protecting rights and fixing credit scores.