Unfortunately, it is estimated that about 60% of information found on credit reports is either incorrect, outdated, or both.
Considering that even the most seemingly insignificant errors can result in you paying a higher interest rate or cause you to be denied a loan completely, it is in your best interest to ensure that you check your credit report regularly for completeness and accuracy. Visit annualcreditreport. This central site allows you to request a free credit report once every 12 months from each of the nationwide consumer credit reporting companies.
Once you receive your credit reports from the three consumer credit reporting companies – Experian™, Equifax®, and TransUnion® – start by checking your personal information such as Social Security number, the spelling of your name, current address, previous addresses, and date of birth for completeness and accuracy.
Next, check your credit history. Ensure that the information (e.g. balance, credit limit, etc.) associated with each account is accurate and up to date.
Check the status of your accounts. As examples, accounts that are “closed” or a loan that is “paid in full” should clearly be reflected on your report; and should show a zero balance.
Negative remarks can be incredibly damaging. Look for words or phrases like “collection” or “charged-off” or statements indicating that a payment is late. If the information is not accurate, dispute the entry immediately and seek to have it removed or updated.
Next, check public record information. If your report shows a foreclosure, bankruptcy, tax lien or court judgment, ensure the information associated with the action is accurate. If it is not accurate, dispute the entry.
Finally, check for any negative entries and their dates. Generally, negative information should be removed after seven years. If the information is older than seven years, take steps to have it removed. Each of the credit bureaus outlines how to go about disputing entries on their respective websites.