A high credit score is important to me, so I check my credit report once every three months to make certain it’s free of errors. Recently, I noticed some inaccurate information; my mortgage loan had been sold to a new company, but on my credit report, there appeared to be two mortgage loans – one with the new company and the same one with the old company.
To correct the error, I filed a dispute on the Equifax website, which only took about three minutes. About two weeks later, I received a letter from Equifax stating that the old loan was now closed. The process to correct the error was quick and easy.
But for many people, credit reports can be filled with pages of information that can be hard to decipher. If you haven’t checked your credit report recently, you can get a free copy at www.annualcreditreport.com.
Once you begin sifting through the report, here are the answers to some key questions you may have:
What should someone be looking for when they go over their Account History section?
First, verify that you own all of the accounts listed. Next, check balances and dates, especially with accounts including negative information. Any inaccuracies should be disputed and if there are any accounts listed that you don’t recognize, begin to investigate these accounts, especially for third-party debt collectors. Though the original creditor of an account should still be listed, companies frequently sell delinquent debts to third-party debt collection companies, so the record appearing in the credit report will be under a different name. Inaccuracies can arise during the transfer, so it is important to verify dates and balances for accuracy.
If you see an error, what should you do?
Each credit reporting bureau includes information in the credit report about how to register a dispute. Generating a paper trail is important, so consumers should dispute information in writing and send copies of any supporting documentation via certified mail.
If there is a public record on the report, is there a certain period of time for that item to be expunged?
Most public records – judgments, foreclosures, Chapter 13 bankruptcies – will stay on a credit report for seven years; a Chapter 7 bankruptcy will remain for 10 years.
How does missing a bill payment affect your score?
Missing a single payment at the 30-day or even 60-day mark will have an impact on a credit report and a negative impact on your credit score. The greater divide comes at the 90-day mark, when consumers are then deemed more likely to miss payments repeatedly. It is important to keep in mind that payment history accounts for 35% of the credit score, so paying on time carries a lot of weight.
If problems occurred a long time ago, and I’ve improved my bill paying habits, will that help?
As negative information gets older, the impact on the credit score lessens. In many cases, the most recent two years will have the greatest impact on the score. However, more recent history needs to reflect positive information. Any new negative information will increase the damage to the score because it will indicate a pattern of late payments.
What do you tell consumers about managing scores?
Credit scores are fluid, so our scores today can be different from next month. Because credit reports are free and credit scores cost money, it is more beneficial for consumers to manage and monitor their credit reports, verifying information and disputing inaccuracies. Credit scores become relevant before consumers actively seek credit – a mortgage, a car loan, a credit card, etc. Especially when shopping for a home loan, consumers should start reviewing credit scores well in advance of applying for credit.