Credit report errors have skyrocketed over the past year. And that’s bad news for consumers.
Your credit report says a lot about you. It lists your open accounts, your various balances, and how much you are using your available credit. As such, it’s important that the information on your credit report is as accurate as possible. Unfortunately, this is not always the case.
The US Public Interest Research Group, a consumer rights organization, recently conducted a review of consumer complaints related to credit reports. He revealed that the Consumer Financial Protection Bureau (CFPB) received significantly more error notices in 2020 than in 2019. In fact, every month in 2020 there were more reporting errors. credit as the same month the previous year.
As of April, errors in credit reports increased by 50% or more on a monthly basis. And in December, errors were up 124% from the previous December.
In total, more than 444,000 credit report error complaints were filed in 2020, up from 277,000 in 2019. That’s an increase of over 60% – and it’s a reminder that consumers need to stay vigilant about their credit reports.
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Why so many mistakes?
Obviously, 2020 has been a tough year for a lot of people financially – and credit report errors certainly haven’t helped matters. So why has there been such a surge in credit report errors? A big reason has to do with the relief measures that were put in place during the pandemic.
The CARES Act, for example, gave mortgage borrowers the option to suspend their mortgage loans. Forbearance borrowers could skip their monthly payments without being reported as past due or overdue on their debts. But even though the CFPB has asked mortgage lenders to count forbearers as being up to date on their loans, many have wrongly reported these borrowers as overdue to the credit bureaus.
The same may have happened with auto loan services and credit card companies that allowed consumers to withhold payments. To be clear, this incorrect report was largely unintentional. At the start of the pandemic, many loan departments scrambled to meet customer service requests and things may have slipped through the cracks on the reporting front. But the end result was that many consumers saw negative information on their credit reports throughout 2020.
Why credit reports matter
As a consumer, you actually have three separate credit reports – one for each of the the three major credit bureaus (Experian, Equifax and TransUnion). Most of the time you will see that your three different reports match, but it is also possible that they contain separate information, especially if one registers an error and the other two do not.
So why are credit report errors so important? Your credit reports list your current loans and your payment history. Negative information on your credit reports results in a lower credit score, making it harder to borrow money when you need it.
It’s also common to ask for your credit report when you apply for a mortgage, rent an apartment, or take out another loan. If there is negative information on your credit report, you may be denied.
How to check your credit reports and correct errors
Under normal circumstances, you are entitled to a free copy of your credit report each year from each reporting bureau. Due to the pandemic, however, you are entitled to free weekly credit reports. You can visit each credit bureau‘s website and request a free copy of your report. You can also go to annualcreditreport.com for a copy of all three reports.
If you spot an error on any of your credit reports, contact the office in question in writing and let them know. If you have any supporting documents, you can include them.
Credit bureaus must investigate all error reports they receive, usually within 30 days. After this period has elapsed, you should receive the results of this investigation in writing. You should also be entitled to a free copy of your updated report if the resolved dispute results in a change in the information reported. In addition, you will have the right to have the office in question send notices of corrections to anyone who has requested your report in the past six months, such as a homeowner or mortgage lender.
Remember, credit report errors aren’t specific to 2020 and pandemic relief programs – they can happen all the time. Try to check your credit report several times a year and if you spot any mistakes that are unfavorable to you, be sure to follow up. The last thing you need is to be turned down for a loan or an opportunity because of somebody else’s mistake.