Recently, 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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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.
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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]