Ordering copies of their credit reports is one of the best ways that consumers can stay on top of their finances and make sure nothing is amiss, because there can occasionally be unfair markings on these documents that can significantly endanger what should be an otherwise good credit score.
Fortunately for borrowers, those who spot such an entry may be able to dispute it with the credit bureau that issued the report. This may help to clear up the issue in general, but it might be wise for consumers who want to order copies of these documents to familiarize themselves with the different ways in which they might be taking a hit on their score without due cause. That, in turn, will help them to deal with whatever problems they might face in the dispute process.
1. Identifying incorrect balances
One way in which lenders might put a person's credit standing in jeopardy is by accidentally misreporting the amount they owe on their various accounts. The size of balances across all accounts versus the limits on them makes up 30 percent of a person's credit rating; typically lenders only want to see borrowers carrying 30 percent or less of their total limits at any one time. As such any mistaken data related to how much is owed can wreak havoc on a rating.
Therefore, when checking a report it's vital to ensure all listed balances are as they should be, and if there's a transposed digit, or other inaccurate information, that this information is disputed as quickly as possible to put it right and boost a score back to where it deserves to be.
2. Finding accounts erroneously listed in your name
A very common issue many consumers have when they check their credit reports is that one or more balances they don't recognize are listed in their names. This can be a sign of one of two things. It could be identity theft, meaning a criminal has obtained their sensitive personal information and used it to open a fraudulent account. Or, more innocuously, it may simply be a mistake made by a creditor, as it's possible that a person working for that company mistyped Social Security numbers, account data, or other information. Unfortunately, despite advancements throughout the industry, human error is still prevalent.
3. Spotting balances sent to collections
Sometimes, when debt moves from a primary lender to a third-party collections agency, the information on a debtor can occasionally get a little muddled, and as a consequence, it might be that a collections agency thinks they have a debt that borrowers are responsible for, when in fact they are not. This, too, can often be resolved by reporting the issue to the credit bureau that issued the report in the first place, but comes with the added potential pitfall that the collections agency may try to contact the wrong person while pursuing the defaulted balance.
4. Mistakes related to payment history
Occasionally, it's possible that a lender will mistakenly say that a borrower missed a payment on an account when they did not, which can be extremely problematic. This is because payment history makes up 35 percent of a person's score, and as such, any payments sent in that were somehow marked as missed can significantly reduce a person's score in short order. In some cases, it may be easy to get this issue sorted out by contacting the lender which made the claim directly, though that isn't always the case.
5. Spot potential signs of identity theft
Finally, taking the time to check a credit report might show that a person is listed as having made a number of recent inquiries to lenders about new lines of credit, ranging from credit cards to personal loans and even mortgages, despite the fact that they have not done so. This can be an issue because it both serves to diminish one's score and can be a sign that criminals have gained access to enough sensitive data that they can apply for lines of credit in the borrower's name.
Another way to deal with these issues
Often, disputing unfair entries on a credit report through the bureau that issued the report or the lenders directly is a time-consuming, expensive and arduous process that comes with no guarantee of resolution. However, those consumers who take the time to check their credit reports closely and want to resolve any unfair markings they may have discovered might do well to consider contacting a credit repair law firm about the issues.
This type of firm may be able to help the dispute process along and resolve the problems more effectively than a borrower might be able to when working to do so on their own. That, in turn, could help to return the borrower's credit standing to where it deserves to be.