Credit bureaus, lenders, creditor and financial institutions make mistakes every year. These credit reporting errors can cost you points on your credit score, meaning hundreds or even thousands of dollars in monthly payments and inflated interest rates.
According to a study released by the US PIRG (Public Interest Research Group) in June 2004 – up to 79% of the consumer credit reports surveyed contained some kind of error or mistake.
How do Credit Reporting Errors are made
Clerical errors account for the majority of credit report errors in your credit report. It is not uncommon to have your name or address misspelled.
Sometimes the information is accurate, but it gets reported twice. This may make it look like you have too much credit for the amount of money you earn annually.
In many cases the information on your credit report belongs to someone else. This typically happens because:
- A person applied for credit under different names (Jones Smith, Jhon Smith, etc.).
- Someone made a clerical error while entering SSN/Name/Address from a hand-written application into the computer system.
- Someone gave an inaccurate Social Security Number, or the number was misread by the lender.
- Loan or credit card payments were inadvertently applied to the wrong account.
Common Credit Reporting Errors
The majority of credit bureau errors fall into one of the following categories:
- Incorrect report of a nonpayment on a debt, loan or a credit-card payment.
- Misfiling by a department store regarding a credit card account
- Confusion regarding family members with the same name.
For instance, Jon Smith Jr.’s irresponsible bill paying could be recorded on Jon Smith Sr.’s credit report.
- Accounts opened without your approval by someone committing identity theft.
A consumer reporting agency must correct or, as the case may be, delete from your credit file the information that is found to be inaccurate or can no longer be verified.