Credit reports are one of the most important financial instruments that consumers use. It is used to determine an individual’s creditworthiness and how much they can borrow. It also demonstrates their history of payment with lenders. However, sometimes mistakes or errors are made on these reports which can have major implications for the way you think about your credit score and borrowing habits.
Here’s a guide on how to handle and respond to credit report errors as well as what to do when you get a credit report.
What is a credit report?
A credit report is a financial history of an individual’s loans, debt, and payments made on those debts over the course of time. Credit reports also show how much a person can borrow in the form of credit limits. Credit reports are produced by three major agencies: Equifax, TransUnion, and Experian.
Why are errors on credit reports important?
Errors on credit reports can have major repercussions. If an account is reported as delinquent, it affects your credit score, which in turn affects a variety of financial decisions you might make, such as whether you’re able to get a loan or buy a home. It also impacts the amount of time it takes for a loan to be approved and how much interest you’ll pay, which could cost you tens of thousands of dollars in interest over the life of the loan.
How to handle an error on your credit report
When you find an error on your credit report, the first thing to do is to check it yourself. The best way to check is by using a free credit report tool or using a paid credit repair service that checks for errors and helps you to fix them. If you think you found an error, the next step is to contact the credit report company and get them to fix it.
If you cannot get the company to fix it, then there are two things that can happen. One option is to dispute the error with them before they report it which usually takes up to 30 days and could help you avoid getting a bad credit score because of the mistake. If you don’t have time or patience for this, another option would be to dispute it after they have reported it by contacting your bank or lender who issued the card.
This will only work if your lender relied on this credit report when deciding whether or not they want you as a customer but most likely won’t result in any changes unless your lender contacts you about it directly.
What to do when you get a credit report
If you’re curious about your credit report or want to check and make sure that everything is accurate, there are a few ways to get it. You can order a copy of your credit report directly from the three nationwide credit reporting agencies. It’s also possible to request an “extended” credit report which includes both public and private information that may not have been reported on your original report.
If you find any errors or mistakes on your credit report, you should contact Equifax, Experian, or TransUnion right away. They should be able to fix the error for you after receiving notification of the mistake on their part. If the situation is urgent and can’t wait for them to fix it, then contact a dispute resolution organization. They can give you help with resolving issues such as drawing up affidavits or providing legal evidence for disputes regarding fraudulent activity on your credit file.