Check Your Credit Report… and Protect Your Credit Score

Published

August 5, 2014

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Most consumers have a sense of how important their credit score is in their everyday financial lives, but many may not be doing all they can to make sure their standing is as secure as it could be.

One of the biggest mistakes a consumer may make when dealing with their credit standing is not making sure to check their credit report regularly. While many experts note that doing so will allow them to spot any potential signs of identity theft, it can also be used to help fix less insidious mistakes and generally ensure that a credit score is as it should be.

For example, studies in recent years have found that as many as 80 percent of all credit reports contain at least one error, and in many cases, those mistakes might be dragging down a consumer’s credit score. And contrary to popular belief, these errors aren’t always the result of fraud, but rather simple mistakes. When lenders report borrowing transactions to the three major credit bureaus, they make a typographical error, such as transposing numbers in a consumer’s Social Security number. That might prompt one person’s account details to end up on another borrower’s credit report. This can obviously become especially problematic if the real borrower falls behind on their bills, which will take a huge chunk out of an unsuspecting consumer’s credit rating.

Fortunately, consumers who check their credit report regularly will be in a better position to spot these erroneous entries on their files. These can be cleared up by contacting the credit bureau that issued the document and alerting them to the mistake. Usually, this process can take as little as a few weeks, but the burden of proof may be on the consumer affected by the mistake, so it’s important to have the necessary documentation to show they’re not responsible.

Of course, because each credit bureau is different, any mistake discovered on one credit report may be on all of them, and so it may be important to order a copy from each reporting company when an error is discovered. This can help to clear up most problems a borrower may face when applying for a new line of credit. Typically, lenders use an applicants’ credit score to determine the terms of the account, and better scores get more favorable interest rates, fees, and the like.

Monitor and learn about your credit with Credit.com’s Free Credit Report Card and remember, we are each entitled to a free copy of our credit reports from the three major credit bureaus once a year.