People always hear about being pro-active in terms of their credit report. It is very important for every person to check his credit report at least once a year. This is because doing so will reveal any sort of reporting errors in the credit report that may have damaged one’s credit score.
Hence, in the opinion of the credit counseling agencies, consumers should be aware of the financial mouse traps that can affect their credit rating adversely.
Common Credit Report Blunders
Following is a list of most common errors commonly found in the credit reports:
- Obsolete credit data – A good number of negative information like delinquent accounts, missed payments, collection accounts, account charge off for outstanding balances and so on should not be there in the credit report after a period of 7 years. However, bankruptcy can stay on the credit report for as much as 10 years. People who have made financial blunders earlier should ensure that these negative information are no longer there in their credit reports after the mandatory 7 years have passed by. If there are any, then they must get that removed by the concerned credit bureau.
- Lender enforced account closure – It is never a good idea to close old credit accounts in the event of a dispute with the creditors. This is because accounts closed by the creditors are reported to the credit bureaus as “closed by grantor”. As a result, it will show the concerned consumer in poor light in terms of credit worthiness, besides having his credit score penalized. Hence, consumers must ensure that closed accounts are reported as paid off and that they have willingly closed those accounts.
- Fake accounts – A lot of consumers find unknown accounts mentioned in their credit reports. However, in worst case scenarios there might be an identity theft through which scam artists have opened a number of credit accounts in an individual’s name. In another instance, there might be a person with similar name and similar Social Security number because of which there was a reporting error. So, errors like these may invite serious allegations and severely affect a person’s credit rating which should be corrected at the earliest.
- Spousal errors – According to the old age maxim, money has always been the root cause of all breakups. Sadly, events like these not just affect an individual’s personal lives but his financial well-being as well. As a result, credit accounts jointly held by the couples continue to hog them long after they got separated from one another because of the ex’s financial mistakes. A remedy for this problem is to take off one’s name from all the accounts that were held by both of them.
- Spare accounts – Quite often some information related to the credit accounts get repeatedly reported to the credit bureaus. As a result, a particular piece of information shows up more than once on the credit reports. This multiplies the credit balance and shows that the person is carrying more debt than what actually is. Moreover, any missed payments or negative credit information will also get doubled or multiplied. This kind of errors usually happens when debts are sold off to the collection agencies because of which both the creditor and the collection agency report the same information separately.
Finally, people who find any sort of errors in their credit reports should immediately report the same to the respective credit bureaus for correction. However, they need to substantiate their claim by providing all the relevant proofs.
