Have you been managing your credit responsibly and still unable to increase your credit score? Are you taking all the necessary actions for increasing your credit and still your credit score is falling? According to a recent study, one in five people has an error on at least one of their credit reports. Errors on your credit reports can decrease your credit score without any mistake from your end. This could hurt your ability to get new lines of credit or make the terms of credit more costly for you. Ultimately, these errors could be costing you loads of money.
How can I save myself from all these unwanted errors? Well, here comes the good news! You can get a Free Credit Report from Credit Bazaar and get a chance to review your information mentioned in the report. Now, if you find errors, you can dispute these to the credit reporting agency and the firm that provided the inappropriate information. If you are looking to acquire any type of credit, you cannot avoid knowing about a credit report or credit score. A lot of awareness has been built around this subject and people are increasingly updating themselves about credit scores. Primarily, your credit score is calculated based on several factors such as your borrowings, repayment history, credit utilization ratio, credit mix, number of hard inquiries and so on. A credit report is nothing but an in-depth report that reveals how you have performed on each of these mentioned factors and other minor aspects. The nature of credit reports and credit scores are dynamic. They can alter with each of your actions, like a default in payment or payment made, a hard inquiry or a fresh loan, etc. You may be taking extremely good care of your credit behavior and taking constructive steps towards building a good credit score, but did you know that your credit report may have certain errors and these errors may be slowly pulling down your credit scores?
- Duplicate accounts: Every credit account should be listed just once on your credit report. However, many times, accounts get listed several times on your report. These accounts which are reported more than once give a false perception that you have a higher credit utilization ratio and more debt than you do.
- Outdated negative information: Most derogatory information such as short sales, delinquencies, judgments, lawsuits, foreclosures, charge-offs, and repossessions typically stays for seven years on your credit report. Based on the type, bankruptcies may remain for 7-10 years. If you have negative information that’s older than this shown on your credit report, it should perhaps be removed, except if it falls into the group where there’s no time limit on reporting. According to several credit reporting agencies, there is no time limit on reporting information about criminal convictions and a few other norms.
- Inappropriate account information: The length of your credit history, your payment history, and your credit utilization ratio are some of the crucial factors used for the calculation of your credit score. If the account information on your credit reports is not correct, it can impact these aspects, which can affect your credit score. The common account errors to watch out for are accounts reflecting an incorrect credit limit, accounts with an incorrect “account opening” date, accounts showing incorrect balance information, accounts that are current but are incorrectly being reported as delinquent, and closed accounts reporting as open.
- Accounts from an ex-spouse:If your ex-spouse and you had joint credit accounts while you were married, you’ll want to take steps to take away your name from these accounts so any subsequent obligation he/she incurs doesn’t influence your credit. Also regularly review your credit reports for ensuring that any new accounts opened by your spouse after your divorce is final, don’t exhibit on your credit reports by error.
- Inaccuracy of Personal Details:If your name, address, employment information, or phone number is inaccurate or misspelled, it could be a clerical mistake. But it may also be an indication that your account has been mixed up with that of someone else’s. Irrespective of the reason, inaccurate identification information that appears on your credit report should be corrected. Additionally, always ensure that your name is spelled entirely correct and the correct middle initial is used. If this is incorrect, there could be particular information on your report from another person with a similar name. Moreover, also review your Social Security number, your address, and employment information. The errors mentioned above are mostly mechanical or oversight errors. However, mistakes due to identity theft are graver in nature. When you come across these kinds of faults, it could mean that someone else has been fraudulently using your identity to gain a specific form of credit. There are high chances that you could be a victim of cybercrime as well. When you come across situations of identity theft, you must examine where and how your identity might have been stolen. It is obligatory that you change your passwords instantly and also the same should be testified to the Cyber Cell of the Police Department.
- Accounts that do not belong to you: If there are accounts on your credit reports that were never opened by you, that’s a major warning signal. The account of someone with a similar name may have incorrectly been counted in on your reports. Or it could be an indication that you’ve been a prey of identity theft. If you think your identity has been stolen, contemplate placing a security freeze on your credit reports to help avoid new, duplicitous accounts from being opened in your name again in the future. There is also a possibility that accounts that you do not recall opening is shown as open in your credit report. This is pretty common for credit cards but might be rare for loan accounts. Before the KYC norms came into the picture, there have been instances of credit cards being issued to individuals without proper solicitation or documents. If you notice such accounts under your name, it is good to get them closed after the reportage of the error.
- Accounts listed as closed by a lender: If you have closed a credit account, just ensure that your report does not mention it as “closed by grantor.” This means that the lender has closed the account, not you, and can hurt your creditworthiness.
- Bad debts older than 7 years: After seven years, credit reporting companies are supposed to remove bad debts from your report. If you’ve ever filed for bankruptcy, discharged debts also should not be mentioned in your report, although the bankruptcy will be.
- Errors due to a mismatch between your name and pan: There might be a possibility that there is a mismatch between your name and your PAN details. Mostly, the reason for this is that you might have undergone a name change or be using different forms of your name such as only with initials for particular accounts and expanded forms in other accounts. This could also happen due to a mechanical error that was instigated when it was reported by your lender.
- Accounts with incorrect balances: If there are incorrect balances included in your loan account, it may cause lots of trouble to you. If the balance is shown higher than the actual balance shown on your credit report, you may lose out opportunities in the future for availing credit. This might land your account in trouble are it might show overdue even though it has been paid off. Therefore, the loan account balance shown must be correctly stated in your report. These norms must be taken special care while checking errors in your credit report.
- Accounts with an incorrect credit limit: The credit limit linked with credit card is a significant determinant of your credit utilization ratio. Fundamentally, the formula used for calculating this ratio is as follows: Credit Utilisation Ratio = Amount Spent on Credit Card / Credit Limit on your Credit Card. When the credit limit shown on your credit report is lower than actual, you are exposed to a risk of your credit utilization ratio being reported as high, which is an important point of concern. If your credit limit is being incorrectly reported, make sure you bring it to dispute with the credit reporting agency and get it corrected.
- The same debt stated more than once: The number of debts in your account affects your credit score largely. The higher the number of debts without corresponding income will lead to difficulty in the attainment of further credit. Likewise, if a debt is wrongly reported twice, it will give you lesser opportunities for availing credit. There is a possibility that while two debts are stated under your account, only one is being specified as serviced (the one you are recompensing) and the other may be shown as delinquent. Though this blunder may be a result of wrong reporting, it can have grave consequences. If you do it at the earliest, errors of this sort might be easy to clear off.
- Accounts wrongly stated as delinquent: Basically, delinquent accounts are those accounts that are way past their due dates or dates of payment. Typically, delinquency is testified at 30, 60, 90 and 120 days after the payment deadline. In the case of credit card accounts, delinquency is reported when even the minimum amount due is not paid. Generally, lenders give you a margin of a month or two and try to remind you through a phone call or an email. After this process and period, an account is testified as delinquent. When an account is being shown as delinquent accidentally, it is a serious error. This is for the reason that a delinquent account could lead to a 100 points drop in your credit score. Furthermore, no lender or creditor would like to lend to an individual with a delinquent account.
- Closed accounts appearing as open: Your credit report also exhibits accounts that are closed. A closed account is a sign that you have satisfactorily paid back the credit card dues or all the loans. Whereas open accounts specify that there is some outstanding in your account and you need to pay off those dues. An open loan account that is way past its deadline is a big warning signal that can indicate to your future lenders that you are incompetent for further credit. If closed accounts are being displayed as open, it is time you used a documentary proof for reporting this error so that you can get it cleared off at the earliest.
- Data management errors: Many times, there could be reinsertion of inappropriate information after its correction was done. The accounts that appear several times with different lenders or creditors listed, especially in the case of accounts in collections or delinquent accounts. These minor mistakes could lead to erroneous fluctuations in credit score.
- Balance errors: There could be accounts showing an incorrect current balance depicted on your credit report which could lead to your credit score going haywire. There could also be an error in the credit limit mentioned in a particular account. An incorrect limit has the power to change your score misleadingly.
Conclusion: On the whole, an error check is mandatory because they could affect your credit score negatively and thus, your ability to get better interest rates, credit, and many such advantages. If a bunch of red flags is shown on your report, the lenders or creditors may think twice before giving you money in case they don’t receive it back. Credit Bazaar gives you a clear picture and explains in detail about the various types of errors mentioned above. Our team of experts offers complete assistance for disputing these mistakes and making your report error-free. Thus, your credit score will be exactly what you deserve, without any blunders. Now stop being penalized for the financial mistakes that you did not make and get the genuine errors in your report fixed with the help of Credit Bazaar!
For any queries regarding Credit Score improvement or Loan contact Credit Bazaar CR Arcade 2nd Floor, Opposite Delta Garden, Next to Shree Mahalaxmi Restaurant, Mira Road East, Thane: 401107