How Credit Report Errors Can Cost You

A total of 79% of credit reports contain errors or inaccuracies of some sort, says a study by the U.S. Public Interest Research Group, a non-profit consumer and public issues watchdog organization. The survey, which was conducted in 30 states, also revealed that:

54% of the reports contained personal or demographic information that was outdated, misspelled or belong to someone else.
22% listed the same loan or mortgage twice.
30% included credit accounts that had been closed for a while but were still reported as open.
25% had serious errors, like false delinquencies and accounts.

Inaccuracies of this sort can dramatically affect your credit score, which will make you seem like a higher risk when you request financing or credit. The result could be credit denial or much higher interest rates, such as if you decide to finance a new auto.

After you obtain a free copy of your credit report, here are two ways you can correct these costly mistakes:

1 - Using a service like Lexington Law Firm to straighten the information out with the credit bureaus.

2 - Researching and disputing the inaccurate information on your own by calling and writing to the credit bureaus.

If you choose the second, keep in mind that there are 3 major credit reporting agencies and lenders can look at any or all of them. You can request credit reports from each bureau, or receive an easy-to-read consolidated 3-in-1 report, including your FICO Score, from online services like CreditReporting.com. Although you are entitled by law to a copy of your credit report for free, you may be charged to obtain your credit score.

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