Do you know the impact of credit report errors?

On behalf of Kazerouni Law Group, APC posted in Consumer Protection on Wednesday, September 21, 2016.

Credit reporting errors are more common than you think, they’re not easy to fix, and they could cause devastating consequences.

Americans have the right to one free credit report from each major credit reporting bureau per year. Unfortunately, many Americans don’t use these free credit checks. This means they have no way of knowing if there’s an error on their credit report until the company’s mistake costs them dearly.

How likely are credit reporting errors?

Consumers have made 158,000 complaints against credit reporting agencies (including Equifax and Experian) since 2012. Over 80 percent of these complaints focused on wrong information.

When the Federal Trade Commission last studied credit reports in 2012, it found that 26 percent of consumers had at least one error. Five percent of the errors were so serious that they devastated consumers’ lives – for example, by raising insurance rates sky high.

Here’s what type of damaging information might come up on a wrong credit report, and how it can affect you. As public radio reported Bobby Allyn wrote in the Washington Post, a credit check while apartment hunting erroneously revealed two felony convictions and other minor crimes. Clearing his credit took the reporter over a dozen phone calls and a county clerk’s assistance. The matter took six weeks to resolve.

While Allyn was able to find an apartment, credit report errors like these can have major impacts on your ability to rent an apartment, obtain auto insurance or get a juicy job offer. Employers, insurers, and landlords use credit reports from these companies to check your credit worthiness and, by extension, your trustworthiness.

Clearing up credit report errors

The first thing to do is check your credit report regularly. Do this before you anticipate applying for a loan, apartment or job, so you can clean up errors before you need to show creditworthiness. If everything looks good, you don’t need to do anything.

If you spot an error, file an internal dispute over the wrong information. Since this can take up to 30 days to move off the report, you might wish to follow up over the phone to see if there’s a way to expedite your claim. You may need to go to the courts yourself, as Allyn did.

It is helpful to have an advocate on your side so contacting an attorney is something to consider if you have an error on your credit report.

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