6 most damaging credit report errors - WNCT | 9 On Your Side Greenville NC & Eastern NC News

By Kirk Haverkamp
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You've probably heard that it's a good idea to check your credit reports for errors once a year. But which errors are the ones that do the most damage to your credit score?

By some estimates, nearly four out of five credit reports contain errors of some sort. But many, if not most, of these are relatively harmless to your credit score -- a misspelled address, an outdated employer or a closed, paid-off account still listed as active.

Here are six common credit report errors that can do some of the most damage to your credit score if left uncorrected.

1 - Account listed as closed by lender

Are there any old accounts that you closed out on your own initiative, perhaps following a billing dispute? If so, beware the words "closed by grantor" on your credit report in reference to that account. That means it was the lender's decision to close the account, and that never reflects well on the borrower. You want to make sure that any accounts that you closed indicate that they were paid off and closed voluntarily by you.

2 - Outdated information

Most negative items on your credit report -- missed payments, delinquencies, collection efforts, charge-offs for unpaid balances -- must drop off your report after seven years. The one exception is bankruptcies, which can stay on it for 10. However, if you have some credit blemishes in your past, check to make sure they're not still listed on your report after seven years. If they are, contact the credit reporting agency that produced the report to have it corrected.

3 - Bogus accounts

Occasionally, you might find on your credit report an account that you don't recognize. In the worst case, it could be that someone has stolen your personal information to open an account in your name. A more benign possibility is that the account belongs to someone with a similar name or social security number and was mistakenly listed on your credit report.

Either way, you want to get this cleared up fast. Although you are not legally responsible for any debts incurred through fraudulent accounts, they can still wreak havoc on your credit until you get them cleared up. If you are a victim of identity theft, you'll want to report it to the FBI immediately, and submit an identify fraud report to each of the three major credit reporting companies.

If it's just someone else's account, you'll still want to get it off your report as quickly as possible. Even if the account is in good standing, that could change suddenly, quite possibly right at the time you need your credit to take out a mortgage or other major loan.

4 - Duplicate accounts

It sometimes happens that information for a credit account gets double-reported to a credit bureau -- that information for the same account shows up twice. So instead of your credit report showing that you have one BigBucks Bank credit card, for example, it shows that you have two.

This means that any balance you have on that card is effectively doubled in terms of your credit report, giving the impression you're carrying more debt than you actually are. Furthermore, any missed payments or other blemishes on the account will likewise be doubled.

One of the most common ways that accounts get double-listed on a credit report is when they've been passed off to collection agencies, so it's reported by both the original lender and one or more collection agencies that have handled the account. All of that simply magnifies the original blemish on your credit.

5 - Old disputes

If you've ever had an ongoing disagreement with a lender that resulted in your withholding payment for a period of time, it could show up on your credit report even if the dispute was eventually resolved in your favor. It could be that the lender once reported you as late with your payments and never corrected it after the dispute was resolved. This is why you always want to keep any correspondence over billing disputes and other credit records for at least seven years.

6 - Ex-spouse fallout

Money, they say, is one of the primary causes of breakups. Unfortunately, the consequences can stick with you for a long time on your credit report. Couples that merge their finances and credit accounts sometimes find that they're stuck with their partner's financial indiscretions long after things go south.

While you can't do anything about the credit damage suffered while you were still a couple, you don't have to accumulate any further black marks after you've separated your financial affairs. Make sure you take your name off all joint accounts and keep a an eye on your credit reports -- maybe order one every four months, since you're entitled to a free report from each of the three credit reporting agencies once a year.

When you find an error

If you find a mistake on your credit report, the first thing you want to do is contact the credit reporting firm that produced the report and tell them you are challenging that item. You'll need to do this in writing. Include copies of any documents supporting your case -- don't send the original documents!

They are then required to investigate, usually within 30 days, and get back to you in writing. If they find the information they had was inaccurate, they must correct it and inform the other two credit reporting agencies of their findings.

If the credit reporting agency doesn't resolve the dispute in your favor, you can ask to have a statement disputing the item including in future credit reports. Next, contact the lender who reported the item and tell them you are disputing it. Include copies of supporting documents. If you can show the information is incorrect, they must tell the credit reporting agency to remove the negative item from your report.

You are entitled to a free copy of your credit report once a year from each of the three major credit reporting agencies -- Equifax, Experian and Transunion. They jointly operate a web site, www.annualcreditreport.com, through which consumers may order their reports.

Note that only your credit report is free -- if you want your FICO credit score, you'll either have to pay for it or sign up for a paid credit monitoring service. The official source for ordering credit scores is www.myfico.com; note that only Equifax and Transunion sell FICO scores directly to consumers. You may receive a free credit score along with your free credit report, but that will not be a FICO score.

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