So how’s your credit? You have a right to know – and you can get a FREE copy of your credit report each year from all three of the reporting agencies, Transunion, Experian and Equifax, by going to this official website.
Especially if you haven’t checked in a while, chances are you’ll find some errors among the three reports. Some may not be serious – in fact, if you have a good credit score of 680 or higher, fixing minor boo-boos may not be worth the effort. In some cases it could actually result in a lower score. But serious errors can significantly impact your credit rating, which can affect everything from your mortgage interest rates to how much you pay for car insurance.
Common Credit Report Errors
If your credit rating could use improvement, here are a few reporting errors to look for – and what to do about them:
Late Payments & Collections: Your report should show no late payments or collections more than seven years old. Since 35 percent of your credit score is based on timely payments, make sure that old stuff is gone. In fact, if you save your annual reports for seven years you can tell just when the bad news was added and make sure it disappears promptly.
Payment Records: All installment loans and collections that have been paid in full or otherwise settled should show a zero balance. Sometimes these records are not updated after you’ve satisfied the debt.
“Mystery” Accounts: If your report shows an account you don’t recognize, contact the creditor immediately to compare your name and Social Security number with the one on the incorrect account. If it’s an incorrect collection you may have to request a “validation of debt,” also known as a “media packet,” which provides details on the account holder. If it’s a case of identity theft, request a “fraud affidavit” from the creditor – and file a police report while you’re at it.
Origin Dates: The length of your credit history counts as 15 percent of your credit score, so make sure the report shows the original date your accounts were opened. If your credit card company was acquired or merged with another company, or if you reported your account as lost or stolen, the origin dates may be inaccurate.
Available Credit: Your debt situation accounts for 30 percent of your credit score – so make sure your credit limits match up with those shown on your credit card statements. Hints: Keeping your balance under 50 percent of your card limit is good – under 30 percent is even better. And think twice before closing a credit card completely, which affects your “available credit” ratio. If you have impulse-control issues, freeze those cards in a big block of ice so you have plenty of time to consider your purchase while they thaw!
Account Types: Different types of accounts are evaluated differently in calculating your credit score. Make sure that a home equity line of credit, for example, is categorized as a second mortgage rather then an unsecured line of credit. If you think your account is categorized incorrectly, contact the creditor directly.
Reason Codes: These can help you understand what factors the credit bureaus used to arrive at your particular credit scores, and what actions you can take to improve them. Again, if you have a good credit score it’s best to leave well-enough reason codes alone.
Help Navigating The Creditor Maze
If you’d like help going through your credit report, just beware of credit-repair scams that can take advantage of well-meaning consumers. Your local Consumer Credit Counseling Service (CCCS) is a non-profit community service agency that provides low-cost services including Credit Report Review. If you’re a Northeast PA resident you can reach them at 800-922-9537, or at www.cccsnepa.org. PS – they also provide great housing counseling for first-time buyers and others!
If you get your credit reports online each reporting agency should have a link for you to dispute a questionable item. Some may even have a form for you to fill out. It’s best to do these inquiries in writing so you have a record of the communication. You can also contact each agency in writing at these addresses:
TransUnion Consumer Solutions
P.O. Box 2000
Chester, PA 19022-2000
Equifax Information Services LLC
P.O. Box 740256
Atlanta, GA 30374
Experian
National Consumer Assistance Center
P.O. Box 2002
Allen, TX 75013
Here’s a sample letter – just personalize the items in red:
Re: Credit report error
Dear Sir or Madam:
I have discovered inaccurate information on my credit report maintained by your agency. The report is in my name, – enter your full name here – , and my Social Security number is – enter your Social Security number here –.
Enclosed, please find a copy of my credit report containing the mistaken data. I have highlighted the errors. Specifically, the following information is incorrect:
Company name: – enter the creditor name here –
Account number: – enter the account number here –
Incorrect information: – enter the incorrect information here –
This is incorrect because: – enter the explanation here –
Please investigate this error with the creditor in question, and when it is confirmed, please remove this error from my credit report. Also, please make this letter a permanent part of my credit record.
If you have any questions about my request or the credit information in question, please do not hesitate to call me at – enter your phone number here –.
Thank you for your prompt attention to my request.
Your signature
Your typed name
Your address
City, state and ZIP code
Enclosure: credit report
– Some content provided by the National Association of Realtors, Bankrate.com, and Consumer Credit Counseling Service.
