Decryption of your credit report
Mistakes happen!
Several studies published in the early 1990s by the nonprofit consumer state Public Interest Research Groups (PIRGs) found that some credit reports contained serious errors and that credit bureaus often refused to correct them.
In the years 1990, 1991 and 1992, complaints about credit reports were the top complaints filed with the Federal Trade Commission (FTC). Other studies by Consumers Union (publishers of Consumer Reports magazine) and an independent credit reporting association reinforced PIRG’s findings.
In 1998, the PIRG did a follow-up report and found that
29% of consumers, or nearly one-third, had errors serious enough on their credit reports that they could lead to credit denials or other adverse actions.
In 2000, a Consumers Union study found similar results.
A massive study completed in 2002 by the Consumer Federation of America (CFA) in conjunction with the National Consumer Reporting Association, a group of small independent credit bureaus, had more discouraging findings. The CFA/NCRA report based on a review of 500,000 consumer reports found that:
29% of consumers had swings of 50 points or more in their credit scores from credit reports from each of the three major credit reporting agencies. The conservative estimate is that at least eight million Americans are at risk of losing their place in the subprime high-cost loan pool.
All errors are not the responsibility of the Credit Agencies
According to the PIRG
Staff at the Federal Reserve Board of Governors also conducted a similar large study of 248,000 reports and also found errors in credit report data. The Fed found that 70% of consumers had at least one business line account with incomplete information. This inaccurate information can deflate a consumer’s credit score.
In fact, in its testimony before Congress in 2003, Capital One admitted that it routinely withholds caps on credit limits, deflating its customers’ credit scores and limiting their ability to shop around for the best terms.
Even the massive Sallie Mae, which insures student loans for the secondary market, has retained a positive payment history. Although she claims to have changed her practices, the negative effects on young borrowers who have fewer credit accounts or business lines in her favor are negative.
Errors to look for
Accounts that are incorrectly marked as delinquent
Incorrectly listed accounts as part of collections
Listed accounts that do not belong to the consumer, whether or not they are in good standing.
Bankruptcies, tax liens, and other judgments that do not belong to the consumer or are still listed as open even though they have been resolved.
Information mixed by the credit bureau in files that contain similar names or addresses, whether of strangers, housemates, relatives and / or spouses.
Inaccurate personal information.
Paid accounts reporting an outstanding balance due.
Closed accounts reported as open.
Multiple reports from the same account.
Reported late payments that you are not aware of.
Inaccurate credit limits.
These are ALL things that can be quite common on credit reports. Make sure you are always up to date with your credit. A great way to stay up to date is to sign up for Score Watch, it’s a MYFICO program.