Today, millions of people around the world have mistakes affecting their credit score without even knowing it. Interestingly, even millionaires have mistakes on their credit report, which reduces the credit score. Statistics show that 80% of people have at least one error on their credit report but the problem is that without taking advantage of the free credit report available each year, many people are simply unaware their credit score is being damaged. Therefore, we encourage you to order a free copy of your credit from all three reporting agencies so any erroneous information could be deleted, mistakes corrected, and omissions added.
We also wanted to provide information pertaining to the most common mistakes affecting a credit score. With this, you would be able to avoid some of the causes of these mistakes or at minimum, be better prepared to recognize potential problems causing your credit score to decline. The more knowledge and the better educated you are about your credit report the more control you have in your credit score. Obviously, your credit score is your window into buying power so it is imperative you maintain the highest score possible.
Remember, some of these mistakes are from financial mismanagement, some are from errors made from people inputting information into the credit scoring system, and some are from creditors not providing credit bureaus with updated information about an account you have. The first mistake commonly found on credit reports is having an account that had been paid in full but showing as still owing a balance. Typically, this mistake is the result of the creditor for that account not reporting to the credit bureau that the account had been paid in full. For this, you would need to obtain a letter from the creditor showing the account was in fact paid off and mail it along with a dispute letter to the applicable agency.
Another common mistake found on credit reports is incorrect information specific to collections activity. In other words, many credit reports will show collections on an account when in fact, no collections exists. This could also be information on balance or last payment made being reported from a collection agency. As with the mistake mentioned above, you would need to contact the collection agency and get a letter in writing identifying and correcting the mistake, which would then be forwarded along with a dispute letter to the credit bureau.
Completely erroneous information is also a problem. Unfortunately, this can be extremely damaging to your credit score so it needs to be caught and corrected immediately. For instance, erroneous information could be credit history not even belonging to you, misinformation regarding your name, address, employment history, etc. Erroneous information could also be bad information on balances, creditor accounts being linked to wrong creditors, and so on.
Other types of mistakes are found on credit reports that affect your credit score and while the process of clean up can be painful, it is essential. By law, you can contact each of the three credit bureaus to include Equifax, Experian, and TransUnion to request a free copy of your credit report once a year. Again, take advantage of this opportunity in that having excellent credit would mean being approved for loans and credit cards, being offered low interest rates, being able to purchase insurance policies or not paying outrageous premiums, and not being passed by for a job.