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Most Common Credit Report Errors

Posted By Jim On 04/19/2011 @ 7:08 am In Credit | 17 Comments

In 2004, the U.S. PIRG did a survey [3] of consumer credit report errors and discovered one in four reports had “serious errors” that could result in denial of credit. 54% contained incorrect personal demographic information. 22% had the same mortgage or loan listed twice. And 79% of the reports surveyed had a mistake.

You read that correctly, 79% of credit reports had an error of some kind on it. That’s absolutely stunning.

When I first read those statistics, I didn’t believe it but having reviewed my credit report many times since then, I’ve discovered my fair share of errors. I’ve discovered someone else’s credit card listed on my report, I’ve found incorrect demographic information, and the worst was seeing that I had a second Social Security Number listed on my account! That’s why it’s so important to review your credit report [4] annually.

When you do, here are the very common errors you should look for:

Erroneous Accounts

When you review the accounts listed, be sure to double check that each one is actually yours. I discovered an erroneous account the very first time I looked at my credit report. The reports share little about the account itself (just the financial institution, last four digits of the account, and some activity data that is useless for my purposes) but fortunately they removed it once I disputed it.

The account would’ve improved my credit score because it was old and lengthened by credit usage history. That, however, is not a reason to keep it. It’s not accurate because it’s not mine, the account could go delinquent at any time, and the sooner you fix a mistake, the easier it is to resolve.

You should also make sure all of your accounts are listed. It’s easier to see an error than it is to catch an omission, so double check that each of your accounts is listed. You want every “account in good standing” you’re entitled.

Inaccurate Account Information

Double check that the information listed for each account is accurate because you might see incorrect or outdated information. For example, you want the credit limit to be accurate since credit utilization [5] is an important factor in your FICO credit score [6]. Other important account details to double check include the date you opened the account (length of credit is important) as well as the type of account (having different types of credit types is good).

Outdated Information

The credit bureaus rely on companies to report your information but there isn’t a mechanism to report when something no longer applies. If you move, you may discover that the credit bureaus still have your old address if your creditors were lazy in reporting the update of information. If a loan is sold from one company to another, the original company may neglect to report that the account has been transfered to another owner or servicer. There are numerous similar scenarios in which things can be listed twice or old data never being updated. Unfortunately, it falls on you to catch and correct it.

Collections & Charge-Offs

Having an incorrect collection or charge-off listed on your account may not be common but I bring it up because they can be devastating on your credit. Your credit score is supposed to be a measurement of how likely you will default on a debt, known as default risk. As you can imagine, defaulting on a debt in the first place is a pretty big indicator that you’re likely to default on another one… which is why making sure this is correct is absolutely paramount. Collections and charge-offs can be incorrectly attributed to you or, in the event you have one, be dated incorrectly. Since they fall off after seven years, it’s benefits you to have the date recorded accurately.

Finally, there’s my case of an erroneous social security number. You’d think they’d have some error checking built in because one person should not have two Social Security Numbers, but apparently they don’t. A few years ago I discovered I my credit report listed two nearly identical Social Security Numbers (in one, a six was replaced by a zero). I don’t know how common that is but it happened to me, so it could happen to you.

Have you seen some crazy credit report errors you want to share with us? Or maybe something mundane but surprising?


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[1] Tweet: http://twitter.com/share

[2] Email: mailto:?subject=http://www.bargaineering.com/articles/common-credit-report-errors.html

[3] survey: http://www.uspirg.org/home/reports/report-archives/financial-privacy--security/financial-privacy--security/mistakes-do-happen-a-look-at-errors-in-consumer-credit-reports

[4] review your credit report: http://www.bargaineering.com/articles/review-your-credit-report-annually.html

[5] credit utilization: http://www.bargaineering.com/articles/credit-utilization.html

[6] FICO credit score: http://www.bargaineering.com/articles/free-fico-credit-score.html

Thank you for reading!