Common Credit Report Errors and How to Fix Them
We might sound like a broken record at this point, but it bears repeating; one of the major factors in your loan application is your credit score. The FTC noted in a study that 1 in 5 consumers surveyed had errors on their credit reports that could impact their scores and result in less favorable terms for loans. “These are eye-opening numbers for American consumers,” said Howard Shelanski, Director of the FTC’s Bureau of Economics. “The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don’t, they are potentially putting their pocketbooks at risk.”
If you are trying to determine what you can do ahead of time to be ready for a home loan, reviewing your credit records and correcting mistakes should be high up on your to-do list.
How can you find out about these errors?
You can get a free copy of your credit report every 12 months from each of the three major credit bureaus using AnnualCreditReport.com. It’s your choice to either request all three reports at once, or to order them individually and spread them out over the course of the year.
What kinds of errors are most common?
Once you’ve obtained your report, you should review it for these most common types of errors:
- Errors in your identity, such as incorrect name, phone number, or address.
- Accounts that belong to another person with a similar name to yours.
- Incorrect accounts as a result of identity theft.
Account status reporting
- Accounts reporting you as the owner, whereas you’re actually just an authorized user.
- Accounts incorrectly reporting as late or delinquent.
- Multiple accounts listed, but they are all for the same debt.
- Accounts that are closed, but still reporting as opened.
- Inconsistencies or incorrect reporting for the last payment date, date opened, or date of first delinquency.
- Accounts with incorrect credit limits.
- Accounts with incorrect balances.
What should you do to fix them?
If you discover mistakes on your credit report, you can contact the credit reporting company (credit bureau) as well as the company that provided the information (creditor). You can file a dispute not only with the credit reporting company but also directly with the creditor, using the same supporting documentation. The CFPB has provided sample letters and instructions for how to submit a dispute. You can request confirmation that the error has been removed from the consumer reporting agency.
If your dispute involves identity theft, you’ll want to take additional steps. The FTC has a website that helps you figure out how to combat identity theft.
If you have a mortgage application already in process, be sure to talk with your mortgage banker about the potential impact of filing a dispute. Some loan products require lenders to apply additional guidelines to credit reports containing disputes, so you’ll want to make sure your mortgage banker is aware of your intentions and has the opportunity to discuss potential implications with you before you file the dispute. If you have already filed a dispute and discover it’s impacting your mortgage application, you can request to have it removed.
Have additional questions about credit reports or disputes? Feel free to contact us anytime, or just fill out the form below for answers to your mortgage questions.
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