The Lowdown on Data Accuracy in Your Credit Report

by Ashley Jacobs on 8 February 2013 (23 comments)

People sometimes shy away from reviewing their credit reports because they’ve heard they are complex and hard to understand. But credit reports are far easier to read than you might think, and reviewing your credit report is a vital part of your financial health! Here are a few reasons you should review your credit report regularly, as well as some important information about credit report accuracy and disputing information you believe is inaccurate.

Why You Should Check Your Credit Report

Four out of five Americans don’t review their credit report. If you haven’t taken a look at your report recently, here are seven reasons to check it today:

It Protects You From Identity Theft – Your credit report is often the first indicator of identity theft. Spot any names, Social Security numbers, or accounts that aren’t yours? If so, someone might have stolen your identity.

It Can Help You Determine Your Creditworthiness – Are you planning on making a big purchase that will require a loan? A review of your credit report will help you identify any issues that might keep you from getting credit. For a nominal fee you can purchase a credit score that will help you better understand where you stand in the range of credit risk and what factors from your credit report are most affecting the number.

It Affects Your Ability to Rent – Landlords will run a credit check to determine if you will be a responsible tenant. A strong credit history will help ensure your application is approved and that you’ll pay a lower security deposit.

It Affects Your Job Prospects – Potential employers may look at your credit report (but, not your score) to determine how responsible you are, what kind of decisions you make with your money, and how prompt you are when it comes to making payments.

It Won’t Hurt Your Scores – Getting your credit report for your personal use won’t negatively impact credit scores. When you request your report, it is identified as a “soft inquiry” and only shows up on your personal credit report.

Beneficial to Your Overall Financial Health – It is just as important to your financial health to check your credit report as it is to check your bank statements.

Enables You to Identify Inaccuracies – The only way you are going to know if there is inaccurate information on your credit report is if you review your report!

How You Can Keep Your Credit Report Accurate

Be Consistent – It is vital for you to provide correct and consistent information on your credit applications. This lowers the chances of incorrect information being associated with your account by the credit grantor and credit reporting agencies

Get your Report Annually – Take advantage of your ability to get one free report from each of the national credit reporting companies every 12 months. To check your report regularly, get one free report from one of the credit bureaus every four months.

If you’ve already received your free reports for the year, you can request additional free reports if you’ve had a lender decline an application, are unemployed and seeking employment, receive welfare assistance, live in a state that allows more than one free credit report each year, or believe you are the victim of identity theft or fraud. If none of those scenarios apply to you, you can get additional reports for a nominal fee of $11.50.

The good news? You are unlikely to find an inaccuracy in your report that would affect your credit scores. Only one half of one percent of inaccuracies reported resulted in a change in credit score. This is because most inaccuracies are clerical errors in your contact information, for example a typo in your name or address, or a transposed digit in your Social Security number.

In spite of the low occurrence of inaccuracies, it is still important to check your report to be vigilant against errors, identity theft, and fraud.

How Do You Dispute Inaccuracies?

What happens if you find an inaccuracy on your credit report? Don’t be intimidated! The dispute process is straightforward and tends to yield positive results. 95% of consumers who dispute an inaccuracy on their report are pleased with the outcome of their dispute.

If you find an error on your credit report, you have the right to file a dispute. In 72% of cases, disputes are resolved within 14 days.

Disputing your credit report is simple and can be done in three easy steps:

  1. Get your Credit Report: You must have a copy of your personal credit report, for example your free annual report, to submit a dispute.  

  2. Follow the Dispute Instructions: Your personal credit report will have instructions on how to dispute inaccuracies by mail, online, or by telephone. It will also include a personal credit report number you may need to provide. When submitting your dispute, remember to be very specific about what you are disputing. For example, “the payment was never late,” or “the account is the result of fraud.”

  3. Wait 30-45 Days: While most disputes are resolved quickly, allow 30-45 days for your dispute to be completed and any necessary documentation to be mailed.

More detailed information about the credit report dispute process can be found on the Experian News Blog as well as the Federal Trade Commission website.

Helpful Resources

Still have questions about credit reports? Submit your question to Ask Experian, a consumer education blog where experts answer your questions about credit. Sample topics this blog has covered include how to prevent ID theft and how fraud alerts work. Additionally, Experian runs LiveCreditSmart.com, a site dedicated to consumer credit education, and you can join them every Wednesday in their #CreditChat on Twitter at 3 p.m. (EST).

Another great resource is the Consumer Financial Protection Bureau (CFPB). CFPB allows people to “Ask CFPB” questions related to credit reports and scores. Questions currently listed include “How do I get and keep a good credit score?” and “How does bankruptcy affect my credit score?

Have you ever had to dispute an inaccuracy on your credit report? What questions do you have about credit report inaccuracies and disputes? Share your experiences and questions in the comment section!

This post was made possible by support from Experian.

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Guest's picture
Ben of SD

I'm surprised four out of five people don't check their credit reports. This is why we need to teach personal finance in schools. Students need to learn these basic financial truths before we throw them out into the real world.

Guest's picture

It would be wonderful if schools taught basic financial literacy. But parents can help out too. I'm beginning to bookmark helpful financial articles and organizing them into a packet to send to my kids. I've also seen parents do this with their pinterest boards. It's never too late to start.

Ashley Jacobs's picture

It would be great if kids could learn about this stuff in school! If taught these concepts from an early age, I have to believe kids would grow up to be more financially responsible.

Guest's picture
Retireby50

Once a year I do a spring cleaning of sorts with all my financial documents. I take out all my investment, credit card, and loan documents and review them carefully. I also do this with my credit report.

I think once a year review is enough. Three times a year might be overdoing it. But then again it is free so if you have a lot of financial things going on in your life I guess it makes sense. For retired people like me who don't have a lot of new activity once a year is good enough. Otherwise I agree with most things in this article.

Ashley Jacobs's picture

Once a year is great! That being said, it can be a good idea to remain a little more vigilant, especially with identity theft being such an issue these days. :)

Guest's picture
Beeswax Mommy

I always thought you can get one free report per year. Didn't know it was actually 3. That's great to know. Thank you. Now if I can only remind myself to do this.

Guest's picture

You can use Google Calendar to set annual reminders. Or you can do reminders based on holidays. For example I always get a report right after Christmas. My credit card use increases around Christmas time. It is therefore a good idea to look over my report to see how much debt I'm carrying and if anyone has stolen my information.

Ashley Jacobs's picture

Yes! One free report from each of the three bureaus every year! And that's a awesome tip from Frugal Hacker. Setting reminders is a great idea!

Guest's picture

Well count me in the 5% that aren't pleased with the outcome of their disputes. Back when I disputed the process was horrible and unorganized. The credit agencies lost documents that I sent them multiple times and I just gave up after a while. The disputed late payments are still on my credit report, though they should fall off due to the 7-year rule in the next year.

Ashley Jacobs's picture

Shoot! I'm so sorry to hear you are one of the few who wasn't happy with the results of your dispute. Sounds like you tried to dispute it awhile ago though. Perhaps the process has gotten better in recent years!

Guest's picture
Robert Tob

Thanks for the info. Someone stole my identity a few years ago. Had to give myself a crash course on credit reports and all that stuff. Wish I had this info back then. But I think this article doesn't go far enough. Maybe a follow up article about specific items to check for or maybe even screenshots might help the novices. Like you said the process is intimidating for the uninitiated. A specific example might be just the thing to help people get over their fear; not that I'm volunteering my own report or anything lol.

Ashley Jacobs's picture

This is a great idea for another article! Thanks for the suggestion!

Guest's picture

If the government mandates that credit agencies must give you three free reports a year, then it must be pretty important for you to get those reports. We frugal folks never pass up a free deal. And this is such an important part of your finances it blows my mind that so many people don't snatch up all the free reports available to them.

Ashley Jacobs's picture

"If the government mandates that credit agencies must give you three free reports a year, then it must be pretty important for you to get those reports." <--Agreed!!!

Guest's picture
Mr.CBB

We order our free report every year and the main reason is to check for accuracy although the free report does not come with the score. We have in the past found incorrect dates, names and credit cards on the report. These are very important and need to be reported. You might have an identity theft that you are not even aware of. The reports from what I've read are pretty straight forward and I'd say don't miss out, order it and take an interest in what the report has to say about you, we do. Great post.

Ashley Jacobs's picture

Thanks for the positive feedback! Glad to hear you take advantage of your ability to check your report. It's definitely an important thing to do!

Guest's picture

When concerned about identity theft changes of address are the most important flag. Someone stealing your identity to commit fraud will want new credit cards going to their mailbox and not yours. They also don't want statements mailed to your address, as that alerts victims to the problem.

Address information is typically found at the top of your report - front and center. If you see an address that does not belong go on high alert.

Ashley Jacobs's picture

Great tip Kevin! So true, that would definitely be a giveaway that someone may have stolen your identity!

Guest's picture
Derek K.

Call centers in India, errors by the very institutions that resell our credit info, drawn out procedures to issue corrections, good people get screwed because these clowns won't clean u their own industry. Can't wait until the lawsuits pour in.

Guest's picture

If you're someone who is trying to rebuild their credit, it can be frustrating if one or more of your good accounts that you pay on time doesn't sow up in all of your credit reports. Some creditors, like subprime lenders, won't even bother to report to the credit bureaus because they fear their competitors will try to take business away from them. If you find this happening, you can always just ask them to report your good behavior.

Guest's picture
Steve

Annual Credit Report is a great place to get credit reports and they are truly free. You can order them once a year. Now a credit score is different and you will normally be required to purchase information on your credit score but it is usually under ten bucks.

Guest's picture

It is surprising to see how many people neglect to stay up to date on their credit information. It is very important to know that everything is in line and accurate! They should teach things like this in school, I am a Junior in college and my parents have taught me about all of these, but I know many of my peers have no idea how to handle any of this on their own!

Guest's picture
yowzayowzayowza

Why check it? No matter what you do, they won't change anything on it. Tried to change an incorrect address on it for 15 years now. Credit Report Fail.