May 102017
 

The following post is contributed by a staff writer.

A credit report is a very important part of our financial lives, yet many of us rarely see ours. We simply let it carry us wherever its information allows us to go, not realizing what opportunities and money may be escaping from us because of what it says.

We all know that a bad credit score leads to higher interest rates, or even to denial for loans. And we all know that better scores get us lower rates and the opportunity to save a lot of money.

But what we don’t always fully appreciate is the possibility that something on our credit report may not be accurate. When that happens, we could lose dozens of points for several years before the negative element finally expires. By that time, it could cost us thousands of dollars–without us ever knowing it’s there.

Most people are intelligent enough to realize why some things are on their credit reports. They make late payments, file bankruptcy, or otherwise mismanage their money, and end up with the credit score they deserve.

But there can be things on your report that don’t belong there, and they can be hurting you financially. Going through the process of disputing credit reports that contained errors has proven very beneficial to many people over the years. Successful challenges typically stem from problems in these three areas.

Failure To Update

When you owe a bill to someone, that creditor will attempt to collect the debt for a certain length of time. If you haven’t paid it by then, they will turn it over to a collection agency.

If you finally take care of the bill at that point, it still may not show up correctly on your credit report. What can happen is that the initial creditor reports your debt as an unpaid write-off, which essentially says you are a bad borrower. That happens if the collection agency collects the money but doesn’t notify the initial creditor or the credit reporting agencies.

If your report shows unpaid debts that you know you paid, dig up your receipts or other proof of payment and challenge the report.

Identity Theft

This is becoming a bigger problem all the time. With so much electronic access to our personal data–social security numbers, account numbers, our name and address, and so on–it’s easier than ever for thieves to open accounts in our name, then have the bill sent elsewhere so that you don’t know about it. They may also make fraudulent transactions on your credit cards that run up your balances.

In this case, the only way to know is to stay up to date with what’s going on. As you receive your credit card statement each month, check every single item and make sure you recognize it as something you really did spend. If anything looks strange, dispute it. And check your credit report periodically to make sure that no one has opened an account with your name.

Human Error

In all the automation of this world, there are still lots of human beings doing things. They mistype account numbers. They fail to update addresses. They make those human mistakes that can cause you to be dinged on your credit score for something that you didn’t do.

This is something to be very careful about when you move. Make sure you put in a forwarding order for your mail, and hang on to that order for a while. If any bills show up as late or misdirected, you will have evidence that you notified the creditor of your new destination.

Documentation is critical in all these areas. If you receive electronic statements, be sure to download and save them. Hang on to them for a few years to make absolutely sure that nothing comes from it. Keep those forwarding orders. Make copies of things. Keep hard copies of your financial life so that everything can be verified.

It’s hard to feel like you’re just a number, but the number assigned to your credit score has a big impact to other numbers assigned to you, like interest rates, credit limits, and even salaries. Watch your credit score carefully. Be responsible, and make sure you take action to deal with any inaccuracies you find.

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