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Your Credit Report: Are Your Credit Records Accurate?

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Credit Report AccuracyLike it or not, your credit report will be examined each time you apply for credit of any kind. This might be viewed in the form of a condensed ‘credit score’ which is a numerical measure of your credit-worthiness. It might also be inspected in full, so it pays for you to take advantage of the free annual credit report that credit reference agencies must provide on request.

These are Equifax, Experian and TransUnion, each of which is obliged to provide you with a free annual credit report. Every time you apply for credit, whether for a credit card, store credit, a car loan or a mortgage, a credit search will be card out. This fact will be stored in credit records that are included in your credit report. Too many such credit searches can negatively impact your credit sore, or FICO score.

Each time you are successful with a credit application, the date that the credit was opened, the account number and lender, credit limit, amount of credit used and monthly payments will be passed by the lender to the credit reference bureau and included in your credit records.

Your Credit Report and Credit Score

Your credit score is calculated using the information contained in the report. That is why it is important that the information it contains is accurate. Mistakes sometimes occur, so you should check it over at least every year- with each of the credit bureaus named above. If you spot anything that you disagree with, you can request that the record be removed or amended. However, you must have documentation to back up your claim.

For example, your report might state that you are associated with somebody else living at the same address, such a close relative.  Perhaps your son got into problems with his credit card, but has since left home.  You can request that the adverse credit records relating to him be removed from your report. If anybody has defaulted from your address, this could affect your own ability to get further credit. It is important that you are aware of every record held in your file.

Harmful Credit Records

The following factors can be particularly harmful to you, and can severely affect your ability to get loans, credits cards or mortgages:

  • Late payments: coded to show how many times you have been late with monthly payments, and how late each was
  • Credit default: credit that has been turned over for collection
  • Court judgments against you for bad debts
  • Bankruptcy
  • Excessive credit searches or inquiries: these indicate that you have been applying for too much credit
  • Credit refusals – where lenders have refused your credit applications
  • Overextended credit, where you have taken on more loans than you are able to repay
  • Garnishments from your paychecks – where deductions have been made from your paycheck at source to cover unpaid loans
  • Credit issues connected with your address – family or others living at the same address as you

Each one of these will affect your ability to be offered credit in the future.  When you apply for any form of credit, the lender will first check your credit report.  They will be particularly seeking out these red flags.

They might simply check your credit score, but might also check both, particularly if your FICO score is less than optimum. This is a score between 400 and 900, which should ideally be at or above 680. If it is above 620 you may still be offered a mortgage, but at or below this will likely prompt a potential lender to scrutinize your credit report.

Amending Inaccurate Records

That’s why it is important that the records held by the credit reference bureaus are accurate. If you disagree with any particular record, you should contact the bureau who will likely send you a form to complete. Once you have submitted the form, the bureau has 30 days in which to investigate the matter.

If you have provided irrefutable evidence, or if the original creditor/lender can no longer offer evidence verifying the record, then the bureaus will change it. It is well worth making the attempt if you feel the record to be inaccurate.

Your credit report is very important document, and contains the same records that determine your credit score (FICO score.) It is important that you understand the information that it contains, and that you check it for accuracy. Adverse records might not prevent you getting a loan, but your interest rate will be higher than average and the amount you can borrow might be reduced. Make sure it is accurate.

The Credit Bureau numbers are:

  • Equifax (800) 685-1111
  • Experian (800) 311-4769
  • Trans Union Corporation (800) 888-4213

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