Act Quickly to Correct Credit Report Errors

by Darla Dernovsek

A cloudy credit report can dim the financial forecast for even the sunniest optimist. That makes it important to spot and correct credit errors promptly.

"These days, it seems that our prospects are often only as good as our credit reports," says Valerie Moss, director of compliance information for the Credit Union National Association, Washington, D.C.

How errors occur

Problems with your credit report can be the result of a simple error, such as a misspelled name or an outdated address.

But Moss points out that errors also can reflect more serious problems, such as another person's debt that has been mistakenly attached to your credit report.

"Sometimes this is accidental; other times, identity theft is involved," Moss says.

Identity theft occurs when someone deliberately misuses your personal information to open accounts in your name or to make purchases on credit or to borrow money. Checking your credit report for errors can help detect identity theft so you can act to protect your financial reputation.

High-cost mistake

Whatever the cause, an error on a credit report can cost you in the form of higher interest rates. You might even lose access to credit.

"If your credit report says you're carrying more debt than you actually are, you may be less likely to get that loan application approved or receive an offer at a favorable interest rate," Moss says.

In addition, other organizations that check credit reports, ranging from employers to insurance companies, might view you negatively.

"Many will view you as high risk if your credit report says you're delinquent on several accounts or carrying a huge amount of debt," Moss says. "Some may not want to take a chance on doing business with you, or even hiring you in some instances."

View your report 

Federal law allows you to access a free copy of your credit report once every 12 months from each of the three major credit reporting companies: Equifax, Experian, and TransUnion.

To check your credit report for errors, call 877-322-8228 or go online to annualcreditreport.com. You can check all three companies at the same time, or order a report from a different company every four months to monitor your report throughout the year. If you find an error in one company's report, it's wise to immediately check the others for errors as well.

You're also eligible for an additional free report if you're a victim of ID theft or if you're notified that information on your credit report led to a denial of credit or services. You must request the free report within 60 days of being denied credit.

You can order additional reports directly from the three credit reporting companies:

• Equifax, Telephone 800-685-1111, or equifax.com
• Experian, Telephone 888-397-3742, or experian.com
• TransUnion, Telephone 800-916-8800, or transunion.com

The Fair Credit Reporting Act (FCRA) requires credit reporting agencies to work with consumers to correct inaccurate or incomplete information in their credit reports. The Federal Trade Commission (FTC) outlines the process for making corrections on its Web site.

Related Pages:
Financial Education
What is a Credit Union?
Membership

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