Costly credit report errors are more common than you think

·Reporter
·3 min read

More than 1 in 3 individuals who volunteered to check their credit report found at least one error, according to a recent study by Consumer Reports, an outcome that could hamper their financial life.

“If you have an error on your credit report, it could negatively impact your credit score,” said Manu Lakkur, director of product management at Credit Karma, “limiting your ability to open a new line of credit or be approved for a loan.”

Read more: Do you know what's true or false about credit scores?

Of the 6,000 volunteers in the study, 1 in 4 found incorrect personal information, 1 in 9 had account errors, 1 in 7 had accounts that weren’t reported as “current,” and 1 in 10 had trouble accessing their report in the first place, the study found.

Credit scores can range from 300 to 850. (Photo: Getty)
Credit scores can range from 300 to 850. (Photo: Getty)

The mistakes can also make it harder to rent an apartment or get a job. Inaccuracies can also add costs to obtaining car insurance, a cell phone plan, or utilities. In some cases, an error may even prevent you from pulling your own credit report.

“Many of the security questions that are asked are based off the information that is on the report, so they need to verify their identity,” Syed Ejaz, policy analyst for Consumer Reports, told Yahoo Money. “But if these questions are based off of inaccurate information, it can be impossible to answer the questions correctly and get your report.”

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If you find an error on your report, it’s on you to get it fixed. Start the process by filing a dispute with the bureau that published the error in your report either via an online portal or through a certified letter. Agencies have 30 days to investigate the error and respond.

“We tell consumers to provide supporting evidence documents to support whatever it is they're saying that they think is incorrect to help the companies do those investigations,” Jonah Kaplan, program manager of consumer reporting markets for the Consumer Finance Protection Bureau, told Yahoo Money.

Supporting documents could include proof of residence, a letter from the bank indicating an account has been closed, or an updated statement with your credit card balance on it. It is also beneficial to contact the lender or debt collector that has provided the information to the bureau.

Checking your credit report for errors is a key component of financial health. (Photo: Getty)
Checking your credit report for errors is a key component of financial health. (Photo: Getty)

The process isn’t always easy. Credit reporting errors have long been a top complaint to the CFPB, with the volume of complaints more than doubling since 2019, Consumer Reports found.

“In 2020, 24 percent of all closed consumer complaints submitted to the CFPB about credit reports focused on a problem with a dispute investigation,” according to Consumer Reports.

Read more: Here's how to correct a mistake on your credit report

Equifax, Experian and TransUnion are the three nationwide bureaus that compile credit reports and, according to the CFPB, have similar rates of complaints. If you run into problems resolving an error on your credit report, file a complaint with the CFPB to get help mediating the process.

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Marissa is a reporter for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @MarissaLGamache.

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