How to Check Credit Reports for Mistakes & What to Do About Them

Your credit score is determined by several factors. We’ve gone over those factors in detail in our article on the topic. However, credit reporting bureaus aren’t perfect. Sometimes, they make mistakes, and those mistakes often have a negative effect on credit scores.

Checking your credit report may help you discover mistakes that are reducing your borrowing ability. Perhaps even more importantly, you may discover fraudulent transactions that reveal you’ve been the victim of identity theft. Either way, you will never know about these mistakes/incidents unless you check.

How Common are Mistakes on Credit Reports?

Mistakes on consumer credit reports are more common than many people realize. A comprehensive Consumer Reports study found that just over a third of participants found mistakes in their credit reports.

There are some conditions that make credit reporting mistakes easier for the bureaus to make. One common mistake is a credit card you’ve paid off being reported as having an outstanding balance.

A Mistake or Fraud?

At this point, it’s important to go over one key difference between reporting mistakes and incidents of fraud.

When a credit reporting bureau makes a mistake, it usually affects only one of your credit reports. In the US, there are 3 major credit bureaus:

• Equifax
• TransUnion
•  Experian

In Canada, the same credit bureaus report individual credit, except for the last one (Experian).

If, for example, an honest mistake is found on your Equifax credit report, your TransUnion and Experian credit reports will likely not include that same mistake. This is why it’s important to check all your credit reports.

It’s free to do once per year, anyway. So, there’s no reason to not order a free credit report from all three.

In instances where your personal information was stolen and a fraudster is using your credit for their own expenses, it’s a bit different.

The transactions they make with your credit cards are legitimate, and should normally be reported to all the bureaus at the time they’re made. If you find this or other evidence of fraud, it’s suggested you contact your credit provider and notify them so they can close the account and charge back the fraudulent transactions.

How Can I Check My Credit Report?

You can request free credit reports from the credit bureaus or through AnnualCreditReport.com. The FTC recommends using this site as “the only authorized website for free credit reports.” This makes it the overall best way to check your credit score.

Many companies offer ongoing credit monitoring including alerts for changes entering your report. The services they offer are normally more comprehensive than anything offered by the bureaus themselves.

Lastly, you can order a free credit report by calling 1-877-322-8228.

Is Checking Your Credit Reports Bad?

No, checking your credit report will not affect your credit score.

It is wise to check your credit score and report often while taking advantage of the free reports you are entitled to.

It can also be prudent to invest in ongoing credit monitoring. For a monthly fee, you can subscribe to a service that provides any mix of:

• Unlimited access to credit reports
• Updates every time an addition is made to your credit report
• Fraud protection and insurance
• Many other benefits

The only time when credit checks negatively impact your credit score is when lenders perform a hard pull on your credit score. This typically only happens when you apply for a loan or any kind of revolving credit (credit cards, lines of credit).

Under normal circumstances, there is no reason to hesitate to order a credit check.

How Do I Correct a Mistake on My Credit Reports?

There are a few ways to go about this.

The fastest and most sure way to handle a mistake on your credit report is to:

• Contact the credit bureau that made the mistake
• Contact the organization (credit provider) that provided the mistaken information to the bureau

For example, if you notice a mistake regarding a Visa credit card in your Equifax credit report, call Visa to report it and then call Equifax right after.

These two parties are both obliged to correct inaccurate or incomplete information on your credit report. Their failure to respond to your requests to correct their mistakes would put them in violation of the Fair Credit Reporting Act.

Conclusions

Checking your credit reports for mistakes can protect you from unfair negative implications on your credit score. It can also help you detect fraud.

If you want the most comprehensive protection from mistakes or fraud, you can subscribe to a credit monitoring service.

Regardless of your current credit score or level of concern over your credit or data privacy, checking your credit reports for mistakes is a prudent course of action that has no negative implications for your credit situation.

Photo by ZHONG Liguo on Unsplash