One in Five Americans Have an Error on Their Credit Report
Finding an error on your credit report isn’t an uncommon experience. In fact, a 2012 study from the Federal Trade Commission found that one in five Americans had an error on their credit reports.
While some of those errors are innocuous — a misspelled name, perhaps, or an old address — others can kill your credit score, potentially costing you tens of thousands of dollars over your lifetime in higher interest rates, upfront deposits and increased insurance premiums.
How Errors Occur
Credit report errors can occur for a number of reasons. The National Consumer Law Center identified four common causes in a 2009 report on the topic.
Mixed Files. If someone with the same name or a similar name applies for credit, a piece of their file may become mixed with yours. A consumer with a common name like “John A. Smith,” for example, could see his file mixed with a John B. Smith or a John A. Smith, Jr.
Identity theft. If someone has stolen your Social Security number, for example, they could open a new account in your name. This information could appear on your credit report and can be especially difficult to remove.
Furnisher Errors. There are three big players when it comes to credit report accuracy: credit bureaus, consumers and “data furnishers.” That last one is important — it’s the banks, lenders, debt collectors, and rental companies that supply (aka “furnish”) the data that appears on your credit reports to the credit bureaus. Often, a furnisher can report something inaccurately, like a missed payment or a collection account that actually belongs to someone else.
Re-Aging of Old Debts. Certain debts have a ticking clock of sorts when it comes to your credit report. A collection account, for example, is supposed to age off of your credit report after 7 years and 180 days from when it was first delinquent. (You can see our guide to the statutes of limitations on debts in each state across the U.S. here.) However, sometimes “re-aging” occurs, often when a debt is sold to a third-party collector and the start date on that clock is muddied, causing your credit to take a hit much longer than it should under the law.
For more information, visit www.askgilaboutcredit.com