Credit reporting errors are a chronic problem made worse by the pandemic, and complaints about credit reporting errors are at an all-time high –plus 86% during the last year. To protect yourself, check your credit reports every three months – especially if you’re planning on applying for credit or funding a large purchase.
What’s happening?
Simply put, the three major credit bureaus (Equifax, Experian and TransUnion) serve the interests of banks and other lenders, not the individual consumer. Because of this, credit reporting errors were already a problem, as Aaron Klein, Policy Director at Brookings Institution, explains to Consumer Reports:
“Credit bureaus are paid by banks and credit providers to produce reports. Hence, their incentive is to create large amounts of data quickly. Making the reports more accurate would be expensive and time consuming, although it would benefit consumers. “
Unfortunately, the pandemic has only made the problem worse Mortgage Loans and Forbearance Confusion on Student Loans caused even more credit report errors.
To make matters worse, these errors are not easy to fix, and trying to do so can take a lot of arguments with a particular agency. That’s a problem President Biden wants to fix it by redesigning the credit agencies to be a more transparent, public directory maintained by the Consumer Financial Protection Bureau.
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How unfixed bugs can hurt you
Mistakes can lower your credit score, which in turn limits your ability to qualify for financing or loans, especially those that offer reasonable interest rates. Common mistakes include repaid loans that appear unpaid, incorrect personal information, and debts that have been mistakenly reported as in collections.
And, as mentioned earlier, some lenders recently reported federal government-backed mortgage and student borrowers as criminals despite the moratorium on payments created by various COVID relief plans. For these reasons, you should always be more vigilant and check your credit reports regularly.
How can I check my credit report?
You can request free credit reports from any of the three credit bureaus annualcreditreport.com (You normally only get one free report per year, but a special provision related to pandemics allows you to get this free every week until the end of April 2022.)
You will be asked some financial questions to verify your identity. Therefore, you want to have your financial records to hand at all times. When you receive the report, go through it line by line. Look for mistakes and see if they contain accurate personal information, as simple typos are surprisingly common.
How can I deny a mistake?
The best way to avoid making more mistakes is to write a letter about the discrepancy to the appropriate office, preferably by registered mail, and request a return confirmation. (The CFIB has letter templates that you can use. Here). Make sure you include copies of any documents supporting your complaint, such as a letter or letter. B. Receipts or payment records. Typically, credit bureaus have 30 to 45 days to respond to complaints, but this, too, has dragged on with the pandemic.
How often should I check my credit reports?
Since you can check your credit score every week for free without affecting your credit score, it is a good idea to do so on a regular basis. At least you should do this once a year. It is often recommended to check your creditworthiness quarterly, if not monthly – especially if you plan to apply for funding or a loan in 2021.
