Most people don’t give their credit report a second thought. They are aware that banks and other creditors retain information about their personal finances, but until something goes wrong and they are turned down for a credit card or auto loan, they file “credit reports” into the sandbox and forget they exist. The truth is, however, that information held by lenders and other financial institutions is not always correct, so it pays to check your credit report at least once a year.
In most cases, humans are responsible for updating an individual’s credit history. So, if you are late paying your credit card or you miss a payment on your truck loan, the finance company will place a note on your credit history. Say, for example, the clerk gets you mixed up with another customer with a very similar name, or the credit company makes a mistake with your account and marks your file as “unpaid”, even though you never missed a payment. Both seemingly minor errors could have a disastrous effect on your credit history, but you might not have a clue until it’s too late.
Unfortunately, inaccuracies are all too common. Humans make mistakes and ordinary people pay the price. But, it isn’t just inaccuracies you need to be concerned about. Whilst mistakes and inaccuracies are a problem, information that is accurate can still be reported in such a way that it is unfair. For example, say you were late making a payment, but it wasn’t technically your fault because the lender routed the payment to the wrong account and they took several weeks to correct the problem. You may not have realized straight away, hence the late payment on your account, but if the creditor doesn’t make that clear on your credit file, it could affect your ability to apply for future credit.
“While federal law allows consumers to challenge inaccurate, unfair or unsubstantiated information, creditors and credit bureaus often only check for inaccuracies,” say Lexington Law representatives. “At Lexington, we believe that they should be held to a higher standard, as reported information may be technically accurate, but still unfairly reported.”
Check Your Credit File
This illustrates why you should make a point of checking your credit file regularly. Unless you check it, you won’t have a clue if there are mistakes on your file or a lender has left unsubstantiated information that could cause a future lender to turn you down for a mortgage. If you spot anything – don’t panic. You can fix credit score by asking the credit agency to remove or amend the incorrect information.
In the US, you can check your credit file for free if you visit this website: https://www.annualcreditreport.com/. If you don’t have access to an internet enabled device, you can contact the credit report request service via telephone or the postal system.
It is a good idea to do this at least once a year. Mistakes could cost you a new mortgage, which would be disastrous if you need to refinance your home or you’re trying to get on the property ladder. Don’t assume everything is fine – it might not be!