Your credit report should contain accurate and fair information. Ultimately, it determines your credit score and helps lenders, creditors, and other companies determine whether to do business with you.
Inaccuracies in credit reports are unfortunately very common. In 2013, the FTC reported that one in five Americans discovered an inaccuracy on their credit report – and that doesn’t include those that went unnoticed.
You should make sure your credit report accurately represents you. The following are six common credit report errors to be aware of.
1. Mistaken Identity
As a result of mistaken identity, incorrect information can appear on your credit report. This can happen when someone with the same or similar name or a street address is entered incorrectly. In either case, it can affect your credit if someone else’s information appears on your report.
Mixing files is more likely when two people with the same name or address share information, such as Thomas Smith, Sr. and Thomas Smith, Jr. Verify that the information on your credit report is yours and not someone else’s.
2. Accounts You Don’t Own
The credit bureaus cannot verify all the information they receive. Credit reports may contain information about accounts you never opened and loans you never took out. Verify that all the companies reporting your information actually do business with you.
3. Closed Accounts Showing as Open
No matter why an account is closed, the creditor should report the closure to the credit bureaus. Consequently, closed credit cards, loans, and other accounts will appear on your credit report as closed. Verify that the open accounts on your credit report are actually still open.
4. Current Accounts Showing as Late or Delinquent
Late payments can result in delinquent accounts. However, sometimes accounts are mistakenly reported delinquent or late. Make sure your current accounts are shown as current and do not indicate that you are having difficulty paying your bills.
5. Duplicate Entries
It is possible for the same account to appear on your credit report multiple times – perhaps with a different name or account number. Only one account per credit report should appear.
6. Balance Inaccuracies
Keep an eye out for accounts that show you owing an incorrect amount, or with incorrect credit limits. Inaccuracies can affect your debt utilization ratio and lower your credit score.
In Closing
It is important to have an accurate credit report. Inaccurate information could indicate human error or even identity theft. You should check your credit report at least once a year. For more up-to-date reporting, credit and identity theft monitoring services can alert you when something changes on your credit report, as well as help you dispute inaccurate information with the credit bureaus.
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