Like baseball, apple pie and binge-watching TV shows on Netflix, finding errors on your credit report has become a national pastime — it’s just a pastime that no one really enjoys.
According to a report from the Federal Trade Commission, one in five Americans have errors hiding on their credit reports. Seems like a large number? It is, considering how important your credit is to buying a house, applying for a credit card and even just getting a cellphone.
How Errors Occur
Credit report errors can occur for a number of reasons. The National Consumer Law Center identified four common causes in a 2009 report on the topic.
- Mixed Files. If someone with the same name or a similar name applies for credit, a piece of their file may become mixed with yours. A consumer with a common name like “John A. Smith,” for example, could see his file mixed with a John B. Smith or a John A. Smith, Jr.
- Identity theft. If someone has stolen your Social Security number, for example, they could open a new account in your name. This information could appear on your credit report and can be especially difficult to remove.
- Furnisher Errors. There are three big players when it comes to credit report accuracy: credit bureaus, consumers and “data furnishers.” That last one is important — it’s the banks, lenders, debt collectors, and rental companies that supply (aka “furnish”) the data that appears on your credit reports to the credit bureaus. Often, a furnisher can report something inaccurately, like a missed payment or a collection account that actually belongs to someone else.
- Re-Aging of Old Debts. Certain debts have a ticking clock of sorts when it comes to your credit report. A collection account, for example, is supposed to age off of your credit report after 7 years and 180 days from when it was first delinquent. (You can see our guide to the statutes of limitations on debts in each state across the U.S. here.) However, sometimes “re-aging” occurs, often when a debt is sold to a third-party collector and the start date on that clock is muddied, causing your credit to take a hit much longer than it should under the law.
What You Can Do About Credit Report Errors
The three major credit reporting agencies all have a dispute system in place to allow consumers to get incorrect information removed from their credit reports. But first, you have to know an error exists. You can get copies of your free annual credit reports at AnnualCreditReport.com. You can also get your free credit report summary every month on Credit.com to see how any errors might be impacting your scores.
One of your biggest obstacles is getting your credit report accurate with each of the credit bureaus. Why’s that? Each of your credit reports from the three major credit reporting agencies can contain different errors. That’s because different furnishers report to different credit bureaus. An incorrect item may only appear on one or two of your credit reports because the bank or lender only reports to those bureaus, and not all three. It can be difficult to sort out which bureaus have inaccurate info in the first place.
The dispute process is also separate for each credit bureau. For example, you could find the same error on all three credit reports — a collection account for a cellphone bill that isn’t yours, let’s say. You have to dispute that item with each of the major credit reporting agencies. In some cases, one bureau may remove the item, siding with you in the dispute process. But wait — the other two bureaus aren’t removing the item — a very frustrating experience for someone who’s applying for a mortgage, for example, and needs an accurate report from each bureau, not just one.
Each credit bureau has an online process for disputing errors, though some consumers opt to write dispute letters and send them via certified mail, along with any supporting documents. You also can dispute inaccurate information directly with the “data furnishers” — your credit card company, for example.
The credit bureaus generally must investigate or remove the error within 30 days, unless they believe the dispute to be frivolous.
[Offer: If you don’t want to go it alone, you can hire companies – like our partner Lexington Law – to manage the credit repair process for you. Learn more about them here or call them at (844) 346-3296 for a free consultation.]
More on Credit Reports & Credit Scores:
- What’s a Good Credit Score?
- How to Get Your Free Annual Credit Report
- How Do I Dispute an Error on My Credit Report?