Why It’s Important to Make Sure your Credit Report is Accurate
Your credit report is important. The information in your report is used for various things. Lenders will look at your credit report when you apply for a loan, for instance, and then use the information contained in it to determine whether or not you get the loan. Your credit report can also determine the interest rate that you will receive on the loan. If there are errors on your credit report, this can affect your ability to get a loan and it can cost you money when you do.
Many people do not realize that there can be errors in a credit report and a lot of people do not check their credit reports at all. A survey from 2005 showed that only 17 percent of adults in Canada checked their credit report in the last three years.
Making sure that the information in your report is accurate is critical. According to the same survey, out of those who checked their report recently, 18 percent found errors.
Some credit report errors are simple data entry issues (such as recording that you borrowed $5000 instead of $500) but some are much more serious (such as having information listed on your account that actually belongs to another person, likely with a similar name). An error on your credit report can also indicate that someone is trying to steal your identity. If you see a number of open credit cards, mortgages, or other loans on your report that you did not apply for, this could be a sign that someone is pretending to be you and opening these accounts.
No matter the type of error, the fact remains that errors on your credit report can make it more difficult for you to get a loan, so it’s important to correct them.
It’s a good idea to know what’s in your credit report. You can get a copy of your credit report for free by mail. To do so, you’ll need to complete forms on the websites of the major credit bureaus (Equifax and TransUnion). Once you complete the required forms, you will be sent a copy of your credit report by mail.
If you want to receive an instant copy of your credit report online, this will cost you money. You will also need to pay if you want a copy of your credit score. A credit score is a three-digit number that represents the information in your credit report. Credit scores range from 300 to 900, with higher being better.
Correcting Errors in your Credit Report
If you find any errors in your credit report, you should contact the credit agency that has recorded the error. They will usually provide you with a form to fill out where you spell out the details of the situation. It’s a good idea to provide supporting documentation to back up the claims you are making.
You might be able to expedite the process by directly contacting the creditor that has listed the error in your credit report. You can ask them to verify their files and provide the correct information to the credit bureaus.
You also have the option of adding a consumer statement to your credit report. This is a brief statement where you outline your situation and explain your position. There is no charge for adding a consumer statement to your credit report and lenders and others who view your report will be able to see your statement and consider it when they make their decisions.
If you believe that the error on your account is due to potential fraud, inform the credit bureaus of this information. You should also report the situation to the Canadian Anti-Fraud Centre. This is a central agency in Canada that collects information on fraud and identity theft.
If you suspect fraud, it’s also a good idea to add a fraud alert, or identity verification alert, to your account. This is a good idea if you have been a victim of fraud, as well as if your wallet was lost or stolen, or if your home was broken into. When you have an alert on your account, lenders will be required to contact you and confirm your identity before they approve any credit applications. The goal of this alert is to prevent further fraud.