You may not give much thought to your credit score in your day-to-day life, but when the time comes for a major purchase or transition, the information in your credit report becomes crucial. People are often unpleasantly surprised at how much inaccurate information can show up on their credit report when they finally take the time to review it.
It’s important to monitor these reports so that they’re looking their best when it matters. There is no one else minding this score; you’re in charge of your credit.
There are some problems that commonly arise in credit reports, and knowing about them will help you to avoid them. A look at some statistics is a good way to get a picture of how credit reports are affecting consumers just like you.
Do we understand the importance of our credit score?
- According to Student Monitor research, 74 percent of college students do not know their credit score.
- The American Bankers Association found that 44 percent of adults mistakenly think that the credit report and credit score are the same things.
- More than half of U.S. adults had never reviewed their credit reports, according to a 2014 survey by Consumer Reports.
- Debt collectors are most frequently responsible for errors. According to the Consumer Financial Protection Bureau, 40 percent of disputes filed with credit reporting companies are related to errors made by debt collectors.
- The credit score you see may not be the same as the one your creditors see. According to the CFPB, about 25 percent of the time the score supplied to a creditor will differ from the one on your credit report enough to place you in a different credit-quality category.
- The Federal Trade Commission reports that one in four consumer credit reports contain errors. These can be related to your identity (the report gets your name wrong), details about accounts or including accounts that you did not open or authorize.
- It can be difficult to correct credit report errors. The Consumer Reports survey found that more than half of the consumers who attempted to fix problems with their reports ran into significant challenges.
Your credit score doesn’t just affect loans. While an unsatisfactory credit score can stop you from getting a loan, it can also cause you to pay a higher rate of interest on money that you borrow. It affects insurance premiums as well as your likelihood of being hired for a job. And unfortunately, credit agencies are not able to ensure that your report is error-free, so it’s critical to keep up with this information yourself and be proactive about protecting your credit.
Start by ordering your free credit report annually (maybe each year on your birthday) at freecreditreport.com. Be sure to get the reports from all 3 bureaus: Experian, Transunion, and Equifax.