10-Minute Money Move: Sleuth for Errors on Your Credit Report

Emma Miller
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In our “10-Minute Money Move” series, we’re highlighting one digestible to-do that can help you take control of your financial life—starting now.

Today, we’re encouraging you to canvass your credit report to help ensure your financial profile isn’t getting sullied by someone else. 

We all make mistakes—and credit bureaus are no exception.

According to a Federal Trade Commission report, 1 in 5 Americans has an error on their credit report—which can lead to overpaying on interest rates and even being denied credit.

The good news, however, is that credit report errors can be corrected—as long as you know how to spot them.

Which brings us to this month’s money move: Catch those mistakes before they do damage to your finances.

Why It’s an Important Move If you didn’t know already, credit reports are a bit like a personal money biography—they record your fiscal past and play a role in your financial future.

Whether you’re applying for a mortgage or a new credit card, lenders largely rely on your credit report to help determine what interest rate you’ll pay—and poor credit can cost you. Drivers with a low credit score, for example, can pay twice as much for car insurance as their well-credited counterparts.

And it doesn’t stop there. “Credit reports can also be used by employers to evaluate candidates,” says John Ulzheimer, a credit pro from CreditSesame.com. “So they even transcend financial services.”

With so much riding on your credit report, it’s time to get sleuthing!

How to Get Moving Step one is to pull a copy of your credit report.

Under the Fair Credit Reporting Act, all Americans are entitled to one free credit report from each of the three major credit bureaus—ExperianEquifax and TransUnion—each year. To download one of these reports at no cost, head to AnnualCreditReport.com.

Report in hand, there are a few different types of errors you’ll want to check for, starting with the identification fields—where most errors occur, says Ulzheimer.

“It’s often a misspelled name, or an address you’ve never lived at,” he explains.

While many of these errors may simply be typos, some identity mistakes can create serious credit headaches—like if your name gets conflated with someone else’s, and you start seeing their accounts on your report.

Next, review the account listings, where more serious errors are typically found. So go through this section with a fine-tooth comb to sniff out:

      • Accounts that don’t seem to belong to you, which could be a sign of identity theft.
      • Accounts that display incorrect credit limits.
      • Erroneous notations of late payments.
      • A loan marked as “open,” when you know you’ve closed it.

If any of these show up on your report, you’ve got some fixing to do.

Have a Few More Minutes to Spare? Hopefully, this due diligence will uncover a clean credit report.

But if you do spot a mistake, quickly contact the bureau that generated the report and dispute the error. This handy checklist will take you through that (lengthier) process step-by-step.

And whether or not you found errors, give yourself a pat on the back for taking control of your credit—and your future finances.

RELATED: My Quest for the Perfect Credit Score

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Unless specifically identified as such, the individuals interviewed or otherwise listed in this piece are neither clients, employees nor affiliates of LearnVest Planning Services and the views expressed are their own. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies. LearnVest, Inc., is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company.