Here's What Happens When You Ignore Minor Credit Report Errors

Of the various things you could spend your time reading, your credit report is likely far from the most exciting one on your list. But while your credit report may not make for the same thrilling read as a new mystery by your favorite author, it's important to pay attention to that report nonetheless. And if you spot an error, it's essential that you correct it at once -- even if the mistake seems minor in nature.

Credit report errors are not an unusual occurrence

The Federal Trade Commission reports that 1 in 5 consumers has had an error appear on their credit report. Now, that doesn't automatically mean that 20% of consumers have had a credit report error that reflects negatively on them. But still, it's important to be on the lookout for errors, including seemingly minor ones, that could be bringing down your credit score. These include:

• Having the same debt listed more than once
• Having incorrect personal loan or credit card balances listed
• Having credit card accounts listed with the wrong credit limit

Why are these errors problematic? The reason is that all of them have the potential to drag down your credit score for different reasons. So not working to get them corrected is a problem.

If you have the same debt listed more than once on your credit report, and it's a credit card balance, that erroneous data could result in a higher credit utilization ratio. And that could damage your credit score by making you seem overextended. 

Similarly, let's say you have an outstanding credit card balance listed as $4,500 when it's really $4,000. You might think that's no big deal. But actually, that extra $500 could push your credit utilization ratio into unfavorable territory.

Similarly, let's say you have a credit card account with an $8,000 limit, but your credit report lists your limit as $6,000. That, too, could be skewing your credit utilization and wrecking your credit score needlessly.

Be mindful of potential fraud

You never want to ignore any credit report error -- even one that reads like not such a big deal. Even a small error could cause a drop in your credit score. From there, you may have a harder time getting a loan or credit card. And you might also qualify for a less favorable interest rate when you are approved to borrow.

But that's not all. You never know when what looks like a duplicate debt or open account on your credit report is actually a fraudulent account a criminal has opened in your name. So that's not something to ignore -- it's something to investigate by contacting both the credit bureau that issued your report, as well as the bank or lending institution in question. 

Credit report errors are pretty common. But don't just let a seemingly minor one take up residence on your credit report. Instead, dig deeper. By working to correct an error, you might end up giving your credit score a nice boost while sparing your personal finances further damage as a result of fraud.