Almost 80 Percent Of All Credit Reports Contain A Mistake. Are You Sure There's Not One In Yours?

As consumers, we are often reminded that we should get copies of our credit reports. However, actually getting a copy of them is similar to flossing - you know it's good for you yet, it's easy to put off. But a new study should shock you into sending away for those reports right away. The study found that almost 80 percent of credit reports contain mistakes.

Several studies over the past 15 years have documented mistakes in credit reports. However, this newest study, conducted by the National Association of State Public Interest Research Groups, is the most alarming yet.  It discovered that 79 percent of all credit reports contain some type of error. Additionally, 25 percent contain such serious errors that those individuals could be denied credit.

Here are some additional findings:

• 54 percent contained inaccurate personal information such as misspelled names, wrong Social Security numbers, inaccurate birth dates, inaccurate information about a spouse and out of date address. For example, one credit report listed a man's business partner as his spouse.
• 30 percent listed "closed" accounts as "open." For example, listing a student loan that was paid off years ago as still outstanding. Another report listed several credit cards, a mortgage and an auto loan all as open.
• 22 percent of reports had the same mortgage or loan listed twice. This mistake often occurs when loans are serviced or sold.
• 8 percent of reports simply didn't list major credit, loan, mortgage or other accounts that could be used to demonstrate the creditworthiness of a consumer.

These errors can create the appearance of a consumer having "too much" credit available, being over-extended, or not having been a responsible payer of his or her obligations.

The “big three” credit report bureaus – Equifax, Experian and TransUnion – have been in this business for years. So how can they possibly be making all of these mistakes?  Most mistakes can be pinned to your creditors and others providing info to the credit bureaus. As mentioned above, some mistakes happen when credit accounts change hands.  Some errors are intentional.  The report found that some banks admit to not furnishing bureaus with complete information on customers. 

Yet, other mistakes are simply human error. According to a credit bureau industry spokesman, some 30,000 data processors file 4.5 billion updates to credit reports each month. That's 150,000 updates per month per data processor, leaving considerable room for errors.

These errors on credit reports can cause consumers serious trouble. Many consumers probably don't realize just how serious the trouble can become.  These mistakes and errors can cause your FICO credit scores to be much lower than they otherwise would be, meaning hundreds of dollars more in expenses per month or not getting approved at all.

It's no secret that banks use your credit report and your FICO credit score to determine interest rates on loans. But now the use of FICO credit scores has spread to other industries even hiring practices.

For example, some insurance companies now examine credit reports to determine what rates you should pay on auto and homeowner's insurance. And there have been media reports about people not getting jobs after employers examined their credit reports. About 35 percent of companies report using credit reports in pre-employment screening. This number is larger - about 40 percent - among retailers.

Regardless of how "busy" you are, you should obtain a copy of your credit report from each credit bureau every year. And there's good news: a 2006 federal law requires credit bureaus to provide consumers with a free copy of their report on an annual basis. The law even establishes one central phone number you can call to request all three reports.

So now that you only have to sign up once to get your report every year and you can do so for free, you have no excuse. Don't you want to know whether you're one of the 80 percent with a (costly) mistake on your credit report so you can fix it? It could mean the difference between hundreds of dollars more per month in expenses or not being approved at all and possibly even getting a job or not.

Special thanks to Christopher Koegler of America Funding in Mclean, Virginia.

Comments

[John]

Hi, nice blog. Pretty informative. But,before you start signing papers with a broker, it is important to discuss fees. Brokers work on a commission basis and often receive lender fees. The broker is usually paid by the buyer or lender. You can pay the broker with cash, rebates, or proceeds from your loan. The fees are added to your total amount.

thanks, john http://www.thejohnbeck.tv