We think of credit bureaus as the ultimate authorities on creditworthiness.
But the truth is, credit bureaus – and the data furnishers reporting to them – make mistakes. The good news is, correcting them can prove invaluable during the credit repair process, and beyond. You’re the only person who you can count on to set the record straight, so check for credit report errors regularly and dispute every mistake you find.
Incorrect personal information
A misspelled name or wrong address on your credit reports may seem like no big deal. But while inaccuracies like these won’t directly impact your credit score, they could signal a bigger problem, like a merged credit report or identity theft. So if you see credit report errors in your personal information – be it your name, date of birth, social security number, address, or employer – let the credit bureaus know of these inaccuracies.
Incorrect account details
Every account on your credit reports should have an account number associated with it. Take the time to compare these numbers with what you have in your own records. Because if an account number is wrong on your credit reports, it could be an account that belongs to someone else.
If you have a debt that gets turned over to a collection agency, you will see the name of the original creditor noted in the listing on your credit reports. If that original creditor is incorrect, then the collector may be trying to collect a debt that does not belong to you.
Late payment listing you know you paid on time
Just one late payment can knock 100 points off your credit score. So it’s not only important to make payments on time, but also to make sure your timely payments are being reflected as such.
Open accounts listed as closed
If you have an open credit card that shows up as closed on your credit reports, your overall credit limit will be lower than it should be. If you don’t have balances on any of your credit cards, it won’t make much of a difference. But if the card that’s showing up as closed had a zero balance and you’re carrying balances on your other credit cards, then your credit utilization ratio could increase considerably.
Beyond the immediate impact on your credit score, an open account listed as closed could do damage down the road. Keep in mind, as long as a credit card is open, it will remain on your credit reports indefinitely, doing good things for the length of your credit history (another key factor in determining your credit score). Closed accounts, however, drop off of your credit reports after a certain length of time – 10 years for accounts that were closed in good standing and 7 years for closed cards that show a history of delinquency.
Note, a credit card issuer may close a credit card for inactivity or delinquencies, so be sure to use yours regularly and responsibly.
As for installment loans, it is normal for the account to be listed as closed once you have paid the balance or refinanced it (in which case the original loan will be closed and a new one opened).
Closed accounts listed as open
If a closed account is listed as open, any unpaid balance that is being reported will negatively impact your credit score. Whether it’s a credit card you paid off and closed yourself, or an installment account you paid off, which automatically closed it for you, make sure it’s being reflected accurately on your credit reports.
Note, it’s never a great idea to close a credit card. Your best bet is using it regularly and returning the balance to zero every month. In this way, your credit score benefits from the available credit, the contribution to your mix of credit, and the demonstration of responsible payment behavior. That said, if you have a history of maxing out credit cards – and you don’t believe you can restrain yourself going forward – consider closing the card. Carrying debt like that will do far more harm to your financial situation in the long run.
Account that doesn’t belong to you
If an identity thief gets their hands on your personal information, they may be able to open a fraudulent credit card account in your name. They can then max it out and leave you holding the bill, not to mention a tanked credit score.
If you see an account on your credit reports that does not belong to you, alert the credit bureaus immediately that you are likely a victim of identity theft. (Be sure to alert the creditor, too.) The sooner you can spot fraudulent accounts the better, so if you haven’t already, sign up for one of numerous free and paid credit monitoring services. And consider a credit freeze.
Wrong accounts – as well as incorrect inquiries, collections, and public records – can also be a sign of merged credit reports. Again, let the credit bureaus know of the inaccuracies as soon as possible so you can start the process of getting things sorted out.
Listings that should have fallen off by now
As much damage as some negative listings may do to your credit, it’s not permanent:
- Credit inquiries fall off your credit reports after 2 years (though hard inquiries stop affecting your score after 12 months and soft inquiries never affect it at all)
- Late payments, charge-offs, collections, foreclosures, judgments, and paid tax liens fall off your credit reports after 7 years
- Bankruptcies fall off your credit reports after 10 years
If any of these types of listings remain (or reappear) on your credit reports longer than they should, it is going to unnecessarily hurt your credit score.
If an account is missing from your credit reports, its absence could hurt your credit score in all sorts of ways. You could be missing out on the benefit of the credit limit, positive payment history, credit mix, and the length of your credit history (the older the account, the bigger the impact).
If it’s a closed account that’s missing from your credit reports, keep in mind that only open accounts will stay on your credit reports indefinitely. A closed account will only stay on your credit reports up to 10 years from the date of last activity.
Finally, remember that creditors are not obligated to report to all three credit bureaus. So if you see a listing on two of your credit reports, but it’s not on the third, that doesn’t necessarily mean it’s “missing” from that third report. It probably just means that the creditor doesn’t report to that third bureau. (To find out which credit bureaus a creditor reports to, just ask.)
Authorized user status
A good way to rebuild bad credit is to become an authorized user on someone else’s credit card account. As long as you and the credit card holder both practice good habits with the credit card, your score will benefit. So if you are, indeed, an authorized user but it’s not showing up on your credit reports, then you’re not reaping the benefits of the arrangement.
That said, there may come a time when you no longer want to be an authorized user on a credit account. If you’ve requested to be removed as an authorized user, but it’s still showing up on your credit reports, then your credit could take a hit from any negative credit behavior (on that account) by the actual credit card holder. In this case, make sure you have taken the necessary steps to remove yourself as an authorized user before disputing the listing with the credit bureaus.
Finally, it’s possible you could be the authorized user on an account – a status you want to keep – but that you are being reported as the as the owner of the account. You don’t want that either. Because it is the owner of the account who is legally responsible for the debt (not the authorized user). If the actual owner of the account charges up a balance that they don’t pay, you could be held liable for it.
How much you charge to your credit cards compared to how much you could charge (i.e., your credit limit) is called your credit utilization ratio. The lower the ratio, the better it is for your credit score – a ratio that most credit experts recommended should range from 10 to 30 percent.
If a credit limit is reported as lower than it really is, then your credit utilization ratio is going to be wrong and your score is going to suffer for it.
How much you owe on your accounts counts for 30 percent of your FICO credit score. This category of credit scoring takes into account:
- How much is owed on all accounts
- How much is owed on different types of accounts
- Credit utilization ratio on revolving accounts (e.g., credit cards, home equity lines of credit)
- How many accounts have balances
- How much is still owed on installment accounts
Total balances/debt is also “moderately influential” on your VangtageScore.
So if a balance is reported as higher than it really is, then it is going to negatively affect everything in this category of credit scoring.
Again, the longer your credit history, the better it is for your credit. So if one of your accounts is showing an open date later than the actual open date, then you’re not getting full credit for the length of time you’ve had the account.
Date of first delinquency
Late payments can only stay on your credit reports for 7 years. It’s the date of first delinquency that determines when the 7 years starts.
As Experian explains:
“The original delinquency date applies to the first late payment in a series. So, if a payment is late today but next month the account is brought current, seven years from today that late payment would be deleted, but the account would continue to be reported with the more current payment history.
“However, if an account were to become late today, the payments were never brought current, it was charged off as bad debt, closed and sent to collection, then the original delinquency date would be today’s date. Even if the bad debt was eventually paid, seven years from today’s date, the closed account and the subsequent collection account would be deleted.”
So if there is an incorrect date of first delinquency on one of your credit accounts, it could mean the negative listing stays on your credit reports longer than it should.
Date of last activity
The statute of limitations is the length of time for which you are legally obligated to pay a delinquent debt. This time period starts ticking from the date of your last activity on the account. So if the date of last activity listed on an account is later than it actually was, then the statute of limitations is going to last longer for you than it should. See what the statute of limitations is in your state.
Multiple listings of the same debt
When you have an unpaid debt, you should expect it to appear on your credit reports. What’s not right is when a creditor and collection agency (or multiple collection agencies) show a balance owed for the same debt. If you have multiple listings like this – for the same debt – dispute it with the credit bureaus. Only one company at a time is legally allowed to collect on a debt from you. It is only that company that should show a balanced owed, and only that company with whom you should make payment arrangements.
Previously removed listings reinserted
It’s possible that the reinsertion of a previously removed listing is in error. However, as pointed out in Common Credit Reporting Complaints (and What to Do About Them), there could be another explanation if you submitted a dispute about the listing in question:
“Maybe the credit bureau didn’t complete its investigation of a disputed item within 30 to 45 days. In that case, the item had to be removed, but could be reinserted if the data furnisher subsequently provides verification of the listing. You can still dispute the listing if you believe it to be inaccurate, but the reinsertion wasn’t illegal.”
Settled accounts not reflected as such
When you negotiate a settlement with a debt collector, and pay it as agreed, you want to see it reflected in your credit reports. Ideally, you want to negotiate a pay for delete, meaning you make the payment and they delete the negative listing from your credit reports. If the collector won’t agree to that then, at the very least, you want the account to show that there is no longer an outstanding balance. If the debt is still showing as unpaid on your reports, it’s going to hurt your credit.
What to Do About Credit Report Errors
If you see any of these errors on your credit reports, dispute them with the credit bureaus. (Refer to this sample credit dispute letter.) Just be sure to check all three of your reports first. Because if the error is only on your Experian credit report, for example, then you should not send a dispute to Equifax or TransUnion.
You can also dispute errors directly with the data furnishers (i.e., the original creditors and collectors reporting the incorrect information about you).
Should the credit bureaus and data furnishers fail to correct the mistake, you can submit a complaint to the Consumer Financial Protection Bureau (CFPB) and the FTC.