Credit: Shutterstock photoThis content is made possible by our sponsor; the views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Even if you happen to be riding high as one of the estimated 62 million Americans with excellent credit, basking in your ability to take out personal loans on a whim and having creditors name their firstborn after you, it's only natural to feel a little trepidation anytime you look at your credit report. And for good reason, as a 2012 report by the Federal Trade Commission estimates that around 20 percent of Americans have errors on their credit reports, causing lenders to judge them as more of a credit risk than they should.
Chances are you have enough credit mishaps of your own making (hey, we get how persuasive the flight crews of United can be) without having to shoulder the burdens placed on you by a bored data entry worker distracted by the World Cup. Here's how to minimize your chances of having your weekend ruined by someone else's mistake.
Be Accurate
There's nothing more frustrating than working hard at making good decisions—paying your credit card bills on time, keeping up with your student loans, etc.—only to have an error show up on your report because you gave a lender a wrong address, or you decided to fill out a form as "Bobby" instead of "Robert." Remember your credit report isn't magically assembled by elves toiling away tirelessly at the credit bureaus—it's the result of dozens of individual creditors reporting whatever data they gathered from their transactions with you. Help minimize the chance that an errant account gets assigned to your report by making sure any information you provide creditors is accurate and consistent.
Seeing Is Believing
Like a big fat grease stain on your favorite shirt, errors on your credit report demand your attention sooner rather than later. Unfortunately, you can't correct a mistake you don't know exists, which is why you need to remain vigilant about looking carefully through your report for errors. The three major credit bureaus—Equifax, Experian and TransUnion—each must provide you one free credit report every 12 months upon request. Take the time to look through that report for anything that looks like a mistake—an incorrect balance on an account, a line of credit you've never seen before, or anything else that could be dragging down your score needlessly.
Take Action
Once you spot a mistake on your credit report, prepare yourself—even though the error wasn't your fault, you still have to put in the lion's share of work in rectifying the error. According to the Consumer Financial Protection Bureau, your first (and hopefully last) order of business is to mail the credit bureau reporting the faulty information, your contact info, a copy of the report, an explanation of exactly where the report is mistaken, any copies of documents that serve as evidence that the mistake is real and a request that the mistaken information be removed.
That's going to make for a hefty envelope, but you want to send that information the old-fashioned way to create a paper trail with the credit bureau that you've informed them of the mistake.
The article, The Report Is Wrong: When Creditors Make a Mistake, originally appeared on ValuePenguin.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
