Credit bureaus track consumers’ credit history: making sure they pay their bills, aren’t late on those bills and how much debt they carry.
There are many credit bureaus but big three are Experian, TransUnion, and Equifax. When you try to borrow money from a lender the lender pulls your credit report from one or more of these firms to determine your creditworthiness.
If there are errors in your report, you can be denied a loan or given a higher interest rate.
A bad credit score can be a major drain on you financially if you are unable to secure a mortgage loan or have to pay a higher interest rate on a loan because you are perceived as a credit risk.
In fact, errors can be so damaging that recently a woman won an $18 million dollar judgment after she sued Equifax for neglecting to correct her credit report after multiple requests.
Even more disturbing, the credit bureaus track and store more than just your credit history. They track changes in your home address and employment.
Lenders can access those personal records which have nothing to do with your credit and could sometimes use that data to deny you a loan.
If you have switched addresses too many times they may see you as less financially stable and deny you a loan. Also, by their rationale, if you’re moving frequently enough they will have more trouble tracking you down should you default on a loan.
If you change jobs too frequently, you’re could also be seen as a risk.
However, a lender must first get your permission to access your employment and home address records by having you sign a release. But if you deny the request, a lender may not give you a loan based on your refusal alone.
Potential employers can even purchase your credit report and use that information to make hiring decisions. A few blemishes in your credit history could cause you to lose a potential job. If you made a poor financial decision at some point, they may feel you’ll make poor decisions at your job.
How errors enter your credit report
If you’ve experienced identity theft and had a criminal take out bad loans or make fraudulent purchases in your name even though it’s obviously not your fault, a credit bureau may add those negative transactions to your credit report
They may have your credit confused with your spouses or somebody else’s entirely. Data entry errors can also happen.
What can you do to correct errors?
If you have been a victim of identity theft the onus is on you to report this to the credit bureaus. You have to notify them with evidence that you are a victim and ask for a confirmation and proof they have fixed the errors.
It’s important to report identity theft to the police within 90 days as police reports will provide evidence to fix credit errors caused by identity theft.
You can also put fraud alerts on your credit report for free by simply asking the credit bureaus. These alerts require a lender to verify your identity before making loan decisions.
You can also purchase monthly credit monitoring services from banks that monitor you credit daily for accounts opened in your name.
TIP: Check your credit report annually. You do not need to pay a third-party service for this report. You can obtain a free copy yearly from www.annualcreditreport.com. If you find an error, file a dispute with the credit bureaus and ask for confirmation the errors have been corrected.
You must be diligent about monitoring your own credit as nobody else is going to do it.
Lastly, visit this link: https://www.usa.gov/credit-reports and discover your rights.
By Phone: Call 1-877-322-8228.
By Mail: Complete the Annual Credit Report Request Form and mail it to:
Annual Credit Report Request Service PO Box 105281 Atlanta, GA 30348-5281