One of the best-recommended ways to gain control over your credit and finances is checking your credit score regularly. If you go without checking your credit score or check it a few times in a year, you will likely have no accurate knowledge of where you stand credit-wise, and consequently, fail to keep your credit in good shape. Checking your credit score also helps you gain insights into what measures hurt or redeem your credit score. Furthermore, frequently scrutinizing one’s credit score allows the person to ascertain the accuracy of the information outlined in the credit report.
Studies carried out on credit reports by various institutions such as the FTC (Federal Trade Commission) reveal that millions of Americans have a significant number of errors detailing their credit reports, thus portraying them as riskier borrowers to lenders. For instance, FTC’s last study indicates that one out of every five American consumers has credit reporting errors. The study further reveals that 5% of American consumers encounter errors. That results in overcharged automotive loans, insurance policies, and card debts.
What are the most common credit reporting errors?
- Identity errors: These are blunders made out of identity information such as misspelled names, incorrect social security number, birth date, or address. On some occasions, a namesake’s details may feature in your account, or the same debt can be featured more than once.
- Incorrect account status: This happens under several circumstances, such as a closed account being reported as open, incorrect delinquency or late reporting, incorporate entries of opening, first delinquency, or last payment dates.
- Balance errors: Your account could reflect an incorrect credit limit or current balance.
- Data management errors: For instance, an authorized user can be listed as an account owner, or some inaccurate information reinserted into the account after a dispute was raised and corrections are done.
Ways credit repair companies correct credit reporting errors
Credit repair companies are organizations that offer to fix mistakes on one’s credit report at a fee. Discover Magazine recommends that you should always vet the services of a credit repair company before engaging them. Some key ways that credit repair entities rectify credit reporting mistakes include:
1. Disputing negative items
The FCRA (Fair Credit Reporting Act) states that every item outlined on a consumer’s credit report must be verifiable. Consequently, to verify the accuracy of the negative items enlisted in a consumer’s credit report, a credit repair services provider can dispute all the negative items on a client’s credit report, regardless of whether the items are accurate or inaccurate. Notably, if a creditor is unable to provide a response within 30-days from the date of the dispute, the negative entries will have to be eliminated from the client’s report.
2. Challenging errors on a customer’s credit report
When you deploy a company to scrutinize your credit report, they will get your credit reports from the three credit bureaus (TransUnion, Equifax, and Experian) and rigorously review the reports to identify potential mistakes or errors. In the process, they could identify errors such as blunders in your payment history, expired negative records, duplicate accounts, and balance errors. Upon identifying inaccuracies on any of the scrutinized reports, the credit report company collects any supporting documentation in your possession for presentation to the three bureaus. The company collaborates with the bureaus to ensure the items are removed, eliminating the heavy lifting of pursuing the bureaus on your own.
3. Giving advice
Sometimes, eliminating inaccurately reported negative information demands time and resources which you can afford to meet. Under such circumstances, reputable credit repair organizations usually scrutinize a client’s report and give advice on how he or she can fix the reporting accuracies within and beyond the existing credit dispute procedures. For instance, a credit repair company can offer guidance on the most impactful errors that should be prioritized on your list.
4. Negotiating a less negative credit report with creditors
Experienced credit repair companies are aware of creditors who can change their credit reports based on specific terms and conditions. For instance, a credit repair entity can help a consumer willing to settle an overdue debt negotiate for less severe reporting. Under other circumstances, the company may arrange the removal of adverse reporting for some payoff.
In summary, the three major ways that credit repair companies can help fix errors in your credit report is through raising disputes, challenging mistakes, or giving advice. On a different note, if the items listed on your credit report are accurate, they can help you develop a payment strategy and assist in negotiating less harmful credit reports.
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