How to check your credit report for accuracy
Checking Your Credit Reports for Accuracy is a Very Important Step So You’ll Know Exactly What to Dispute
Be extra diligent when looking for errors
Now that you know how to read credit reports, (if you’ve read step 5 of our 10-step guide) you now need to look through all of your existing accounts listed on each of your three reports. Is all of the listed information showing accurately? You the negative items in fact belong to you? With identity theft running rampant in today’s society, you may find accounts, debts, or even misspellings of your name that you are in no way responsible for. If so, be sure to highlight or circle those debts and dispute with the credit bureau(s) as soon as possible.
Hiring a professional credit repair company to do this can make your life a lot easier. They know the laws and your rights, and they know what to look for when scouring through a credit report.
Another common error found on credit reports is listing a loan twice. This can simply occur by mistake or it can occur if a loan gets sold to a collection agency. You might have one negative item showing up two or even three times. When disputing these, there is a great chance of getting them all removed from your credit file. By allowing such an error to appear on your credit report, you may be denied credit in the future, as it can appear like you’re carrying too much debt.
Another related inaccuracy to look for is when closed accounts are listed as open.
Also check to see if all your paid debts are listed as “paid.” If they aren’t, that will wreak further havoc your payment history (35% of your credit score).
Check the statuses of all of your accounts and make sure they are accurate
Make sure that you also check for the correct status of all of your accounts. One or several of your credit or loan accounts may be incorrectly labeled as “delinquent” or “in collections” when in fact they aren’t.
Most debts have a 7-year statute of limitations. Whether that debt is paid or unpaid, after 7 years that debt should no longer appear in your credit report. If you spot a debt that’s over 7 years old, make sure it’s deleted as soon as possible. Exceptions to the 7-year rule include bankruptcies, which will often remain on your report for at least 10 years.
Believe it or not, excluding accounts from your credit reports can also affect your FICO score. Such an error can make it seem like you a lack a solid credit history, especially when those accounts are in good standing.
Look our for innacurate credit limits
Keep an eye out for inaccurate credit limits. Sometimes you may have $10,000 limit on your credit card, but creditor limit might be showing only $5,000. Having them correct that simple issue will raise your credit score because you will have more utilization, which is part of their algorithm of how they figure out credit scores.
If you hold a $500.00 balance on a credit card with an available credit limit of $2,000.00, you’re only using 25% of your available credit. If that credit limit is listed as $1,000.00, you’re using 50%. That will, most likely, have a drastic effect on your credit score. The optimal utilization ratio should be around 10%. So, if you have $1000 worth of credit available, you should try to keep your outstanding balances under $100.
Make sure that your amounts owed are correct. 30% of your credit score consists of amounts owed. If a creditor is listing you as having more debt than you actually do, that is not accurate information and would need to be updated immediately.
Ungerstanding your debt-to-income ratio
In order to achieve a good credit rating, you also need a good debt-to-income ratio. If your debt significantly outweighs your income, you’re in bad shape. It’s suggested that every consumer maintains a debt-to-income ratio of 36% or less.
Even errors in basic information (i.e.: name, social security number, date of birth) may affect your credit score. For example, if your name is Ronald Harrison, Jr. and your father is(Ronald Harrison, Sr.) and he has accrued significant debt, that debt may be transferred to your file if the name is listed incorrectly. Your credit reports must be 100% accurate. No error is too big or small.
As I’ve mentioned previously, 79% of credit reports contain errors. 25% of those errors are severe enough to cause consumers to get denied loans and credit. Your three credit bureaus are far from infallible, so if you don’t stay on top of your credit reports, don’t be surprised to encounter a major decrease in your credit score, forcing you repair your credit.
Dispute anything that you are not 100% sure about
Lastly, we must mention this. Even if you feel that a debt may actually be yours but you’re not fully sure, it is your right to essentially force the credit bureaus to prove that the debt or negative item is yours. So, it would behoove you to pretty much dispute everything on your credit report just to make sure.
A good credit repair company knows the loopholes around this, and they also know your rights as a consumer. Don’t delay and make sure that your credit file is 100% accurate today.