Repair Costly Credit Report Errors

april 21, 2021 | credit monitoring

Your credit score sometimes seems almighty, doesn't it? This three-digit number can determine approvals for credit cards, mortgages or rental housing. Job applications weigh these digits, also. Most of us expect our score will accurately reflect our habits and practices. Still, one study on credit bureau errors indicates that one in four consumer files contained errors—some of which were extremely serious.

Lending rates are lower for those with the highest scores. That score can impact telephone applications, deposits and more. Even auto insurance costs go up or down depending on credit scores. An accurate score is vital unless you enjoy giving away money. Know your score and monitor it proactively. Any significant dip—20 points or more—could indicate new, adverse data has landed in your file.

High Error Rates

The Federal Trade Commission studied credit bureau errors over 10 years at the request of Congress. The commission's first-of-its-kind report released in 2013 contained some alarming facts. The rate of mistakes found in credit files topped 26%. One in four Americans had a problem.

That study involved 1,001 participants, with 262 discovering potentially significant errors in their reports. Of that subset, 206 were able to get their credit report altered after filing a dispute. However, only 129 saw a change in credit score. While most changes equated to less than a 20-point adjustment, for some consumers, that was very valuable.

"Out of the entire population of participants, we found that 52 consumers (5% of the total participants) experienced an increase in score such that their credit risk tier decreased, and the consumer may have been more likely to be offered a lower auto loan interest rate," the authors wrote.

A subsequent report in 2015 indicated that some individuals in the original study who initiated the dispute process gave up short of a fix. Those consumers stated the process was too time-consuming, too much effort or they didn't see the value of perusing the issue.

Who's The Victim?

Mix-ups occur most frequently if you have a common name. The courts have heard numerous cases of blended files that triggered employment or credit woes for at least one of the individuals who experienced another person's data linked to their name.

The data sender can create errors, also. Typos are common and potentially costly. While the Fair Credit Reporting Act (FCRA) expects bureaus to work hard to ensure maximum accuracy, some companies have been a bit lax in rooting out false data.

In that quest for facts, not fiction, the FTC settled charges last December against a California-based tenant background provider. The allegations charged that the firm failed to "implement reasonable procedures to ensure that criminal and eviction records it received from a third-party vendor were accurate before including such information in its tenant screening reports."

Beyond the Big Three

All sorts of agencies collect your data in addition to the Big 3 credit bureaus. Tenant background checkers make up one group. (link to rent ID theft here). The list also includes companies that collect info on your work history and past salaries.

Many of these firms operate in relative anonymity, and consumers are often totally unaware they exist. However, errors in these files are harmful, and these groups still need to comply with FCRA taking steps to maintain accuracy. If you can locate the company report that resulted in an unfavorable decision, you can challenge its contents.

Scam Time

You will likely come across ventures that offer to repair your credit. Some demand an up-front fee. That's illegal. Yet, the federal government receives thousands of complaints about this scam category yearly.

Red flags wave if the company worker offers to remove lots of information from your credit report. They'll urge you to dispute everything hoping that doing so will shake loose some positive change. Others simply give you a To-Do list.

Your best bet is to dispute issues you feel are inaccurate yourself and accept those that are accurate but negative. Experts recommend filing your own written disputes rather than using a company's online form, which could attempt to pigeonhole your challenge to make it easier to fit their system.

You don't need a one size fits all approach; you want consideration that weighs all the details of your specific situation. All disputes should be in writing with a certified letter; start a file of actions taken and individuals who take your calls. IDShield can provide detailed help with these issues, and we do most of the work for our members.

IDShield is a product of Pre-Paid Legal Services, Inc. d/b/a LegalShield (“LegalShield”). LegalShield provides access to identity theft protection and restoration services. For complete terms, coverage, and conditions, please see an identity theft plan. All Licensed Private Investigators are licensed in the state of Oklahoma. This is meant to provide general information and is not intended to provide legal advice, render an opinion, or provide any specific recommendations.