ccording to Federal Trade Commission research, around 5% of U.S. customers found mistakes in their credit reports. For this reason, it's essential to monitor your reports regularly to check for inaccuracies and promptly correct them before they significantly influence your financial life. So, how do you look for errors, and what do you do when you find one? Here is a comprehensive guide for updating and correcting your credit reports. Let's dig in!
What Are Common Credit Report Errors?
Credit report errors happen when creditors make mistakes in their records and report the credit bureaus inaccurate information. In addition, identity theft, data breaches, and clerical mistakes might all be to blame. Here are some common credit report errors:
Incorrect Personal Information
Incorrect personal information is one of the most prevalent credit report errors. This may be due to typos or misunderstandings while entering them. Thus, double-check your personal information, such as name, address, birth date, and social security number (SSN).
One of your reports could include an account belonging to someone with the same name. If someone else opens an account in your name, it is a possible red flag for identity theft.
Account Reporting Mistakes
A creditor, such as a bank or credit card issuer, must report to the credit bureau. Sometimes, they could report errors leading to errors in your credit report. Here are a few examples:
- Closed accounts are listed as open.
- Incorrect reporting of late payments, opening dates, and or other payments.
- Multiple entries for the same debt.
- Instead of being listed as an authorized user, you are shown as the account's owner.
- Incorrect credit limit and current balance listed.
Reinsertion of Incorrect Information
Sometimes, the incorrect information previously removed from a credit report may resurface. The credit issues of any account older than seven years won't be shown. If it's still reporting it, it's a mistake. For instance, if you have a payment you missed eight years ago that is still showing up on your credit report, you may dispute it.
How to Dispute Credit Report Errors?
Now that you know the most significant credit report errors, here are steps to dispute these reports and reinstate your credit report.
Get Your Credit Report.
First and foremost, you should get a copy of your credit report online or by mail. Instead of contacting each reporting agency separately, you can use the following methods to get your credit report:
- Visit annualcreditreport.com to request the report.
- Call 1-877-322-8228 to have your report delivered.
- Fill up the annual credit report request form. Then mail it to Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.
Review Your Credit Reports.
Once you have received your credit report, review it for any errors or traces of credit fraud and identity theft. One thing to keep in mind is that the creditors report to the credit bureaus once a month. So, just because you paid two weeks ago and it's not showing does not mean that there is an error. If it still hasn't shown by the end of the month, then you may file a report.
Gather Materials and Documents to Dispute Errors.
Make sure you have documents to back up your claim before submitting it. For instance, if you figured out that your credit card payment is listed as more than 90 days past due, you can gather the payment check showing that you had made payment before that date.
Contact the Creditors.
So, here's the shortcut for not applying to the credit bureau, waiting for the investigation, and then updating your report. If a creditor misreported information about you, you may directly contact them. Ask them to correct the mistake they made and update the report.
If you are wondering whom to contact, it's the creditor, such as a bank with whom you have a loan or your credit card company. For instance, if the error is about a credit card, contact your credit card company about it. However, if you were unable to reach your creditor, or if they were uncooperative, you should submit a dispute to the credit bureau. But make sure your creditors know that you have filed the claim.
File a Dispute Claim.
You can report the credit error to the credit bureaus online, by email, or by mail. The best option, however, is to report online since it is simple and quick. Here is information for contacting each bureau:
If you are looking for a sample to write the dispute letter, here's a sample. You're welcome! Also, make sure you send copies as additional documents, not originals!
Wait for the investigation.
Typically, the investigation ends within 30–45 days following its filing. In between, it may ask you for additional information or evidence from you. Make sure you have them on hand if you're asked for them.
Analyze the Findings
After completing the credit bureau's investigation, the results will be sent to you. Review the results to see if it's in your favor or not. If it is, check for an update on your credit report. On average, the process takes 45 days. If it still needs to be updated, contact the credit bureau again. If it isn't in your favor and you are unsatisfied with the result, you can resubmit a dispute with additional documents to support your case.
How to Make Your Credit Reports Error Free?
Frequently monitoring your credit report is the best way to make it error-free. Credit monitoring is like a regular health checkup. It helps you figure out the problems to solve before it's too late. There are free monitoring tools and paid tools available that can help you monitor your credit reports.
But remember that credit monitoring helps you know the errors or identity thefts so that you can take the required steps to prevent their potential impacts on your credit score and profile. It does not protect from errors or identity thefts from happening.
Is It Worth Paying for Credit Monitoring Services?
It's crucial to monitor your credit profile to ensure there are no credit errors, identity theft, and data breaches. Of course, free credit monitoring services help you monitor your credit profile. But, they offer limited services and only monitor one or two of your credit reports. If you do not have time to watch your credit report manually and want more comprehensive monitoring, then paid credit monitoring services are the way to go.
Paid credit monitoring service is best in the following circumstances:
- You must monitor your credit regularly if you have already been an identity theft victim. Since your data has already been breached, similar incidents are likely to happen.
- If your data has been breached, there is a high risk of identity theft. For instance, if you have lost your social security card, there is a high chance of identity theft. Thus, make sure you are alert about potential attacks.
- If you do not have time to monitor the credit manually, use paid monitoring service to keep track of your credit.
- You have a lot of accounts and high-valued assets. Then it's best to sign up for the paid credit monitoring service. This way, you can monitor all your accounts under one service.
However, if you have few accounts, are on a tight budget, and opt to monitor your credit manually, it might not be worth paying. After all, combining free credit reports, credit monitoring services, and your effort and time to monitor credit replicates what paid credit monitoring services to offer.
Best Paid Credit Monitoring Service
There are plenty of paid credit monitoring services available. But you should choose the one which offers three-bureau credit monitoring. To help you choose, here are some of our favorite picks with their price:
- identityIQ: $23.99 per month
- Complete ID: $13.99 per month
- I.D. Watchdog: $21.95 per month
- Privacy guard: $24.99 per month
- FICO advanced: $29.95 per month
- Identity Guard: $25 per month
- myFico: $15.95 per month
- Identity Force: $17.99 per month
- TransUnion: $ 29.95 per month
- Experian: $24.99 per month
Credit reports determine your credit eligibility and loan conditions. Like good grades get you scholarships, good credit scores get you lower interest rates and better terms when you borrow money. However, there are chances of errors in your report, which might not be your fault, but you have to bear its consequence. Thus, it's crucial to timely find and correct such errors so they do not impact your financial life. The best to do so is through credit monitoring. Whether you should pay for credit monitoring depends on how likely you monitor your credit, affordability, and the high risk you bear.