Your credit report is one of the single most important financial documents in your life. Whenever you apply for any type of loan, lenders are going to look at your credit report to decide whether to lend to you -- and how much interest to charge. Potential employers may check your credit, and your credit report probably will be pulled when you try to rent an apartment, connect your utilities, or do something as simple as getting a cellphone.
Since credit reports are so important to so many aspects of your life, it's essential they're accurate. Unfortunately, they actually contain far more errors than most people realize. In fact, problems with credit reports are one of the top complaints made to the Consumer Financial Protection Bureau (CFPB). Close to a third of all complaints made to CFPB during the 2016 to 2017 year resulted from problems with consumer credit reports, and as many people complained about credit report issues as they did about debt collectors.
Consumers have reason to complain, as millions of Americans may potentially have errors on their credit reports. Here's how to find out if you're one of them.
How common are credit report errors?
CFPB received 317,200 complaints from October 2017 to September 2017 and around 85,000 of them dealt with credit reporting problems. This is a significant number of complaints, but the number of people who have problems on their credit reports likely is far greater.
In fact, an older report from the Federal Trade Commission released in late 2012 indicated that 1 in 5 consumers who examined their credit reports found mistakes and had modifications made. Around 13% of consumers actually had their credit score changed after disputing inaccurate information. And around 5% of all consumers were found to have a mistake that significantly impacted the likelihood of getting approved for credit or the terms of any loan they'd be offered.
There's no reason to believe things have improved substantially in subsequent years. In fact, the high number of complaints made about credit reporting agencies suggest there are still serious issues with accuracy.
How to find out if your credit report has a mistake
The only way to know if your credit report contains mistakes is to check your full report -- not just your score. You can obtain a free copy from Equifax, Experian, and TransUnion one time each year. These are the three major credit reporting bureaus in the United States. To obtain your report from each of these bureaus, visit Annual Credit Report.com.
Errors can be introduced at any time, so don't assume that if you've checked your credit in the past, it's 100% accurate. You should check on a regular basis to make sure there are no issues. If you pull one report from Annual Credit Report.com from each bureau every three months, you'll be able to keep tabs on your credit without paying for a report.
You also can obtain copies of your Equifax and TransUnion credit reports from Credit Karma. And if you're denied credit, you can request a free copy of your report from the bureau the lender used to check on you.
Once you've obtained a copy of your report, look carefully for:
- Inaccurate reporting of late payments
- Judgments against you that weren't actually issued
- Creditors who incorrectly reported accounts as being charged off or in default
- Accounts you don't recognize
- Addresses you've never used
- Alternative names you haven't used
Some of these -- such as accounts you don't recognize -- could be signs of identity theft. Any of this misinformation could potentially hurt your score and ability to obtain credit.
What to do if your credit report has errors
If you find a mistake on your credit report, you're entitled to dispute the error. You can do so via mail or online with each of the credit reporting bureaus. The Federal Trade Commission provides a sample letter you can use to submit a dispute and recommends submitting by mail so you have a record.
The information you need to submit your dispute is below for each of the credit reporting agencies:
- Equifax: Mail your letter to Equifax, PO Box 740256, Atlanta, GA 30374-0256, or submit online disputes here.
- Experian: Mail your dispute request to Experian, PO Box 4500, Allen, TX 75013, or submit your dispute online here.
- TransUnion: Mail your request to Consumer Dispute Center, PO Box 2000, Chester, PA 19016, or submit your dispute online here.
Credit reporting agencies are typically required to investigate disputes within 30 days after you submit your request, unless the dispute is seen as frivolous. This investigation includes providing information you submitted to the credit issuer that placed the allegedly incorrect information on your report. Issuers need to investigate, respond, and report back to the credit reporting agency. If they determine they reported something incorrectly, they'are required to notify all three reporting agencies.
You'll receive a written summary of the results of the investigation after the process is complete. If your credit report is changed because of the dispute, you also must be provided with a new free copy. Credit reporting agencies are prohibited from putting already-disputed information back on your report unless or until the credit issuer that reported the information provides verification of its accuracy.
Make sure to check your credit -- today
It takes time to dispute inaccuracies on a credit report, so don't wait until you may need a loan or must have your credit checked for a job or rental application. Check your credit report today and take action if you're one of the many Americans with inaccuracies on this important financial document.