Money Talks, So Should You

Why checking your credit report is an absolute must

Jeff Brown
by Jeff Brown, MainStreet contributor

Two important statistics: 22 percent of Americans have never checked the accuracy of their credit reports; and 23 percent have had a credit-report problem such as incorrect information that undermined their ability to borrow.

In other words: check your credit report!

In addition to preventing you from getting a loan, a credit error could hurt your job hunt.

The figures come from FindLaw.com, the legal-information site, which says most errors are easily corrected.

“Sixty-eight percent of people who found a problem said that the problem was later corrected to their satisfaction,” FindLaw says. “An additional 14 percent of people encountered multiple problems but were able to get at least one of the problems corrected. Eighteen percent of people who had problems with their credit report were never able to get their problems corrected.”

A credit report shows how much debt a person has and where he or she has fallen behind on debt payments or gone through bankruptcy. There also is mundane information, such as the person’s home address and identities of present and past employers. (A credit score is different. It’s a number that represents the information in your credit report.")

SLIDESHOW: Top 10 cities for credit scores

FindLaw’s survey found the most common problems included incorrect or outdated information on such things as delinquent payments and bankruptcies and bad data on work history, marital status and criminal background. Many respondents said they had also been confused with another person, been victims of identity theft or had their credit score reported as lower than it actually was. Many of those surveyed said they had been denied credit because of errors in their reports.

“Under the Fair and Accurate Credit Transactions Act, all Americans are entitled to a free credit report from each of the three major credit reporting agencies once every 12 months,” FindLaw says. “Federal law also sets requirements for resolving disputes involving the accuracy of information in a person's credit report.”

Many people don’t find out that their credit report contains errors until they are denied credit. That can cause a real problem, because even if the error is corrected and the loan approved, the car or home you had your eye on may have been sold to someone else. Also, in most states, it is legal for employers to consider credit reports in evaluating job applicants, so an error, even if fixed, could cost you a job.

READ: Three smart strategies to improve your credit score

The Fair Credit Reporting Act requires that a creditor explain the reasons credit is declined. Some lenders provide it along with the denial, others only upon subsequent request. In some cases you should make your request to the lender, in others to the credit reporting agency. Findlaw provides a sample letter for making such a request, along with addresses for the three credit reporting agencies.

The agencies are required by law to provide credit reports for free.

 

For the past 20 of his nearly 40 years in journalism, Jeff Brown has written about personal finance, economics and the financial markets. He has been a staff writer at The Philadelphia Inquirer and other papers, and in his six-year freelance career has been a columnist for TheStreet.com and the Nightly Business Report on PBS and blogged for The New York Times, MSNBC.com and other Internet sites.