Credit 101

4 Credit Report Mistakes That Might Be Damaging Your Score

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4 Credit Report Mistakes That Might Be Damaging Your ScoreRecently, a client sat in my office, shocked to discover that her credit was in bad shape even though she had always been very diligent about paying her loans on time. It turned out that some innocent-seeming and easily-overlooked errors on her report had dramatically reduced her credit score.

When it’s time to get a mortgage or car loan, we show up to the lending office and fill out the forms. The agent types in the information we provide, they pull our credit reports and look at the score, and then a decision whether or not to lend us the money and, if approved, at what interest rate. But it might surprise you to discover that simple errors (which aren’t your fault) could prevent you from getting that loan.

The credit reporting agencies (Equifax, Experian, TransUnion) are private companies and they collect a lot information about you from many different sources. Unfortunately, not all of that information is correct. Sometimes it might be incorrectly entered, or maybe it’s accidentally assigned to you instead of to someone else who has a similar last name or address. And, if you’re a victim of identity theft, there might be fraudulent accounts in your name that you didn’t even know about. What you need to do is obtain your credit report (you get 3 free ones each year — one from each CRA — from AnnualCreditReport.com), and read carefully to be sure the information in all sections is accurate AND complete. You can also monitor your credit score for free using Credit.com’s Credit Report Card.

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Check Your Credit For FreeHere are 4 types of errors that can appear on your credit reports:

1. Credit history. Make sure that they have correctly listed your previous jobs and residential addresses. If you lived at 815 Smith Street but one lender typed in 851 Smith Street by mistake could falsely suggest that you lived in two different addresses in a very short time — a small and easily-overlooked detail that could make a lender think you are more transient than you really are.

2. Identifying information. You may see a collection account appearing on your report that is not yours or a credit card that never belonged to you. It all could be because someone else’s information was mixed in with yours thanks to wrongly inputting a Social Security number. Once you determine whether or not this is a result of identity theft, make sure it gets corrected.

[Credit Score Tool: Get your free credit score and report card from Credit.com]

3. Credit accounts. Have they listed everything they’re supposed to? Lenders like to see a variety of well-managed loan types, so if you borrowed money and paid it back in a timely fashion but it doesn’t show up on your credit report, it could be enough to lower your score. Make sure your reports show everything.

4. Payment information. Make sure any paid-off loans are showing up as paid off. Review the dates and amounts (including any late payment indicators) to make sure that your payments are being reported accurately.

Mistakes happen & that is why being AWARE of what is being reported about you is accurate. Only you can check to make sure all of this information is correct. A fast-typing lender could transpose your address or amounts or the date of a payment and in one quick typing mistake, can drop your credit score dramatically. These simple errors could prevent you from borrowing money. The best thing to do is to regularly pull your credit reports and check thoroughly so when you do need the money, your credit report accurately reflects your real credit.

[Free Resource: Check your credit score and report card for free with Credit.com]

Image: iStockphoto

  • athiya

    I will definitely keep these suggestions in mind.. Thanks.

  • http://none amy Willingham

    What about those companys like Aaron’a who say they will report your positive credit once you have made 6 diligent payments but they don’t report. I got furniture from them just for that reason, and when I asked the manager if/when they report positive payment history to the reporting agencies he balked. Made me wish I would have gone elsewhere to purchase furniture.

  • angel

    I just hit 850! just being aware of what the bereaus look for helped me get there, like balance to limit ratio, keeping my very first card account open, giving me a longer credit history… it can be done!!!

  • angel

    *bureau (sp) Sorry!

  • brian

    Look there is loop holes in how to get credit reports and score. If you go to your banks website they may have an id theft service that you can try out for 30 day trial. billing will occur on the 30 day so make sure you cancel before the deadline. Please be considerate to the agent you speak with on the phone when you cancel. The agent is just like you trying to make a dollar and has to try to rebuttal to save you or the will get fired and the cancellation goes against that persons numbers. The agent main focus is to help you but are required and pressured to save customers. when you call to cancel say you are permanently moving out of the country to India or ask for a supervisor at the beginning of the call before you let them know you are canceling, every company has exceptions on agent call rate if you say the right thing. Please be kind to agents and only screw the company.

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