There are many different facts, and many different falsehoods, that we each hear on a daily basis about our credit reports. It’s easy to get caught up in inaccurate information about our credit reports, and to not know what is true and what is false.
Especially when it comes to errors on our credit reports, there is a lot of confusion. Well, let me help you clear the confusion a bit and understand some of the facts surrounding errors on credit reports.
Here are 3 important facts to know concerning errors on your credit reports:
Fact #1: There are errors on credit reports.
The Federal Trade Commission (FTC) recently came out with a study about credit report accuracy. You’ve heard many people say that the majority of credit reports contain errors. But the percentages that they found of credit reports containing errors might surprise you. In the FTC’s study, they found that only 26% of credit reports (out of 1,001 people surveyed) had material errors on them. And only a little over 5% of participants in the study had errors on their credit reports that were bad enough to have an actual significant impact on their credit scores.
So again, with so many of us believing that most credit reports have errors on them, that percent is surprisingly low. 5%? Not bad! Right?
Well when you look at the numbers instead of just the percentages, you will see that there are still millions of Americans living with significant errors on their credit reports. Each of the three major credit bureaus manage files for over 200 million adults. So let’s take a look at how Edmund Mierzwinski, the consumer program director for the U.S. Public Interest Research Group, broke down the numbers. He explained, “If 5% of consumers overall have serious errors, that’s about 10 million adults. Sooner or later, it will happen to you.”
So, although the study found that only around 5% of credit reports have errors on them, that equates to about 10 million Americans having significant errors on their credit reports. That is a lot.
Fact #2: It is up to you to find errors on your reports.
How do you know if you are one of the approximately 10 million Americans with significant errors on their reports? Well first off make sure you understand that it is definitely up to you to find these errors on your reports. There is a common misconception among many Americans that there is some sort of group or organization that is in charge of finding errors on consumers’ credit reports. And that is absolutely false. The fact of the matter is, the only way that errors will be uncovered on your credit reports is if you find them yourself.
So how do you find errors on your credit reports? You start by accessing copies of them. You can order copies of all three of your credit reports for free every year. Sadly, only about 1 in 5 Americans are actually accessing their credit reports. But there is no way to know if you have errors on your credit reports unless you actually order copies of them.
Keep in mind that you might need help recognizing these errors. Errors can be difficult to find on credit reports, especially because the credit reports themselves can be difficult to navigate and understand. So if you suspect you may have errors on your reports, you might want to hire an experienced company to help you look through your reports and identify any possible errors.
Fact #3: You have the right to dispute errors on your credit reports.
If you do find errors on your credit reports, understand that you have the right, according to federal law, to dispute any errors on your reports and work to have them updated. Just like searching out and identifying errors yourself is the only way to know if you have errors on your credit reports, disputing those errors with the credit bureaus and/or your creditors is the only way to have those errors corrected or removed.
Again, you might need to seek professional help in order to be able to successfully dispute these items. Out of all disputes that are filed, only about 13% of participants in the FTC’s study achieved a change in their credit score. First off, that means that not all disputes are successful. That is why it is important for you to get help in this process if you don’t know what you’re doing.
But again, don’t look at that percent as a bad thing. If just 5% of 200 million equates to 10 million people with errors on their reports, that means that 13% could equate to a lot of people achieving the higher credit scores that they deserve through this disputation process. The important thing to understand is that you do have the right to dispute any errors you have on your reports, and if you do dispute these items properly (getting help if you need to) that could mean a big difference in your scores.
Guest Author: Contributed by Chase Sagum. Chase writes about credit repair and personal finance issues/opportunities.