Don’t Let Credit Report Errors Affect Your Life
There are many reasons why you should check your credit report, if not three times a year, at least annually. Who knows when you might really want a house, or that job you always wanted is requesting a credit report; it would be a shame to miss out on such an incredible opportunity because of a data collection error.
After bankruptcy, it is important to check your credit report from each of the three credit bureaus. Make sure they accurately present discharged debt and outstanding debt. After bankruptcy, one of your main priorities is to rebuild credit, so it is important to make sure no errors negatively impacting your credit history and credit score exist.
Different Bureau, Different Credit Report
- The FTC and FCRA: Credit Reporting agencies are regulated by the Federal Trade Commission (FTC) and held to the standards and guidelines stated in the Fair Credit Reporting Act (FCRA).
- Companies Run for Profit: Credit bureaus are not government agencies or extensions of the government. They are companies run for profit and because of this, they compete against each other selling credit reports. This means, not all credit reporting agencies have the same information in their credit reports.
Reminder: You are entitled to one free credit report from each of the credit reporting agencies on an annual basis, in total a potential three free credit reports per year. Take advantage of this tool and be proactive in your credit success.
Checking Your Report Might Help Fix Your Credit
First, your credit score is directly dependent on your credit report; having a good credit score is the best way to obtain, a car loan, mortgage a home, rent an apartment, acquire a credit card, etc. Looking at your credit report and making sure all your discharged debt and outstanding debt are respectively addressed will save you in the long run.
Second, with your permission and in permissible situations landlords, creditors, employers, and insurance companies, etc. can obtain a copy of your credit report, as discussed in the Who Can Pull a Credit Report on You blog. There is a lot of information that can be obtained about someone from a credit report and it is important to make sure this information is correct and accurate.
For example: Let’s say you received a discharge from your tax debt, after completing a chapter 13 bankruptcy plan. Then three years later, after taking the appropriate steps to rebuild your credit, you decided to buy a car and get a loan, they will run a credit report on you. However, for some fluke, your tax debt from three years ago was not reported correctly. When they pull your credit report, “credit report error,” is going to negatively impact your chance of getting the car or even increase the interest rates of your loan.
Types of Credit Report Errors and What to Look For
Bias and Inferred Information: Credit is subject to error, in some circumstances, the source of information or inferences used by the credit analyst can lead to credit report errors. Credit analyst uses certain “characterizations” to sell their services to companies who are more interested in digging up negative information. This sort of confirmation bias has led to unreliable information and often misleading reports.
- For Example, an analyst reaching out to a perturbed neighbor, creditor, colleague, or employer, about your moral character; for an investigative consumer report. This individual might not like you, but the sample size of one annoyed individual is not a fair representation of your character.
- Vast Amounts of Data: You might be thinking right now that not all credit analyst operates in such a punitive manner, and you would be correct. Mistakes happen, and the credit analyst is composing information on hundreds of millions, of credit consuming Americans.
- If they made a mistake 1% of the time, meaning they were 99% accurate.
- One million Americans would have errors in their credit reports.
- Now this statistic is factitious, (in regards to their margin of error) but it serves a point because it demonstrates the magnitude of credit consumers, all of which with credit reports.
- There are bound to be mistakes and errors in credit reports.
- Commingling Error: A common form of these errors is referred to as the “Commingling” of Files. This occurs when similar names and social security numbers get mixed up. For this reason alone, even if you believe your credit score to be good it is important to pull a credit report, at least annually, to make sure no information about someone else is in your report.