Credit Report Errors: Most Common Credit Report Errors
Your credit score is probably the most important factor that comes into play when you apply for credit. Your credit scores is what determines whether you get approved for credit, mortgages, auto loans, or any revolving or installment credit. Your credit scores also determine what your insurance premium is: The lower your credit scores, the higher your insurance premium. Your credit scores is derived from your credit report. Your credit report is a history of your credit and payment history, public records, and personal information. If you are late on a monthly payment, it will be reflected on your credit report and will definitely hurt your credit scores. Everyone should check their credit reports periodically because credit reports do contain errors and it is up to you to dispute errors on the credit reports by notifying the three major credit bureaus: Transunion, Experian, and Equifax.
Most Common Credit Report Errors: Get Free Copy Of Your Credit Report Once A Year
Make sure your personal profile and former addresses are correct. Many times the credit bureaus have incorrect information about you on your credit report. This is very common for those with common names like Jim Jones or John Smith. There might even have erroneous employer information on the credit report that might raise a red flag when you are applying for a mortgage or auto loan where the underwriting for those application might deny the loan application because they might think you were not truthful in listing your employment history. At best, it will cause delays and the lender might ask you to write a letter of explanation and provide proof. Also check to see if your name is spelled correctly and/or middle name is correct. When you find that there are other names or variations of your name posted on your credit report and have incorrect addresses, this could be a sign that someone other than yourself might have applied credit using your name and your social security number with a different address. Identity theft is one of the fastest growing crimes in America and anyone can be a victim of identity theft.
Monitor Credit Report
Also check to see that all of the credit accounts on your credit report is actually yours and not someone else’s. If you do find bills that are not in your name but is listing on your credit report, make sure you investigate it and dispute it to the three credit reporting agencies. This could be a signal that you are a victim of Identity Theft and that someone has opened a credit account using your name and social security number but a different address. This is very common and many times the victim does not realize this is happening until at a later date.
Check For Credit Limit Decrease On Credit Reports
Make sure that all of your credit card limits are what they are and that the creditor has not posted a lower credit limit than what you have. This is important because it is call the credit utilization ratio and consists of the credit balance divided by the credit limit. The lower your credit utilization ratio, the higher your credit scores. So if you have a credit balance but the credit limit is being reported lower than your actual credit limit, your credit utilization ratio will be higher, thus, hurting your credit scores.
Monitor That Derogatories Over 7 Years Old Are Removed From Credit Reports
Prior bad credit histories stay on your credit reports for a period of 7 years with the exception of bankruptcies which remain on your credit report for 10 years. Make sure that all of your bad credit items that are 7 years old or older have been deleted off your credit reports.
Credit Disputes On Credit Reports During Mortgage Process
I strongly recommend that you check your credit reports often and dispute errors or items that do not belong to you. However, if you are going through a credit repair program and want to delete bad credit items by disputing items that are actually your but are hoping that the creditor does not report back to the credit bureaus, thus, having your item deleted, that tactic will backfire on you if you are planning on applying for a residential mortgage loan. Fannie Mae and FHA guidelines prohibit credit disputes with a credit balance during the mortgage qualifying process. You need to retract the dispute or pay off the disputed item. The problem with retracting the dispute, it can plummet your credit scores by 80 or more points. This has happens time and time again so please do not dispute derogatory items with credit balances.