Why You MUST Check Your Credit Report

Category: Finance

You may feel your good credit is safe from thieves because you take good care of your critical personal data. But ironically, it seems you are far more likely to have your credit ruined by the companies who give you credit, than by identity thieves. Here's the how and why of credit monitoring...

Monitoring Your Credit Report: How and Why

A Federal Trade Commission study released a year ago found that 26 percent of the 1,001 consumers surveyed had at least one “potentially material” error in the credit reports issued by the three major credit reporting agencies (Equifax, Experian and Trans Union). Five percent of them had errors that could increase the cost of insurance or loans. But don't blame the reporting agencies for these problems; they're just the messengers.

The Consumer Data Industry Association, a mouthpiece of the credit reporting agencies, pointed the finger at banks, finance companies, and other firms that provide credit data to the reporting agencies. The CDIA claims that only 2.2 percent of reports contain errors that can make insurance or a loan more expensive, and 88 percent of those errors are due to bad data submitted to the reporting agencies.

Credit Report Monitoring

The impact of a “clerical error” can be as devastating as identity theft. Just ask Kimberly Haman of St. Louis, who was twice denied a mortgage loan and once a credit card because her Equifax credit report showed a bank listing her as “deceased.” The 46 year-old financial services supervisor is very much alive but could not get her record corrected, despite repeated assurances from the bank and Equifax that it would be done. So Haman is suing, and she stands an excellent chance of winning thousands in damages.

It's not just banks and mortgage companies that want to check your credit. Potential landlords, employers, and government agencies can do so as well. So it's in your best interest so make sure the picture they'll see represents the real you. The Fair Credit Reporting Act requires credit reporting agencies to promptly investigate consumer claims of errors and fix them. Violations of the FCRA carry statutory penalties of up to $1,000 each, but juries are free to award more.

A Challenge Can Pay Off

See my TEN TIPS on Avoiding Fraud and Identity Theft to learn how to better protect yourself.

Last year, an Oregon woman was awarded over $18 million. She had repeatedly asked Equifax to remove incorrect information on her credit report, which included accounts she never opened, bogus debt collection attempts, and an incorrect social security number. TransUnion and Experian were responsive to her requests to remove the incorrect data, but Equifax failed to respond, even after eight requests, over a two year period. “Juries are starting to get pretty annoyed with the cavalier attitude that these bureaus are taking to their responsibilities,” says consumer credit attorney Sylvia Goldsmith.

So, no matter how careful you are to avoid identity theft, it’s still important to monitor your credit history and challenge errors immediately. My article, Free Credit Reports Online discusses ways to get three free snapshots of your credit history per year. It also discusses fee-based credit monitoring services such as LifeLock and other companies that monitor your accounts and alert you to changes in your credit records in real time.

TIP: Don't confuse your Credit REPORT with your Credit SCORE. Here's info on how to get a Free Credit Score, without getting ripped off.

If you discover an error in your credit history, it’s important to challenge it immediately and forcefully. When a disputed item is reported to a credit reporting agency, that item must be omitted from any reports the agency issues to lenders and other inquirers until the matter is resolved.

But don’t think you can just file a dispute and it will be “taken care of.” As Ms. Haman’s story shows, the most obvious errors can go unfixed simply because no one takes responsibility for fixing it. A disputed item can potentially affect your credit score, and thus your ability to borrow or get insurance. Other errors might impact your ability to get a lease, or even a job. If errors are not corrected upon your request, it may be worthwhile to have an attorney handle any necessary follow-up. Let the credit reporting agency know you’re serious if you want prompt action.

Have you checked your credit report recently? Do you know the difference between a credit report and a credit score? Post your comment or question below...

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Most recent comments on "Why You MUST Check Your Credit Report"

Posted by:

27 Feb 2014

That last paragraph is so true. Correcting an error on your credit report is easier said then done. Personally I would go after the company that submitted the incorrect data to the credit reporting agencies and request they correct things. They can do it, because I've been on that side of the fence and helped out customers correct their credit reports.

Posted by:

27 Feb 2014

I don't see anything in your post about how to get your credit REPORT, and frankly, I have no idea how.

EDITOR'S NOTE: There's a link in the article: http://askbobrankin.com/howto_free_credit_reports_online.html

Posted by:

27 Feb 2014

I still prefer transactions that involve ca$h, to the maximum extent possible. If I don't have it, I can't spend it! I know I know: It is the 21st Century, and I should at least take lessons in how to swipe a CC at the grocery check out but then I would also have to provide data to a whole slew of people I have never met and then I have to contact these Credit Reporting agencies to check out my ratings. Then, if there are errors, But I don't want to find out that I have to be part of that discussion of your last paragraph or part of those nightmares that Carole helps out with.
Have any of these credit reporting agencies been breached and vital personal information been ransacked?

Posted by:

John Loftus
27 Feb 2014


I went through the process of asking for credit reports and scores but was not able to view the results. What do I do to retrieve them?
Thank you.

Posted by:

27 Feb 2014

I would be more surprised to find a credit report that didn't contain errors. In my very simple credit history I found many errors over the years. Most didn't affect my credit scores, just sloppy clerical errors. Some due to my son having the same name.

Posted by:

27 Feb 2014


Are you absolutely sure that one MUST live beyond her/his means and hence have a credit report?

EDITOR'S NOTE: I don't think having a credit card necessarily implies living beyond your means. You can use it for convenience, and not be mired in debt. And do people outside the USA never get a home mortgage or car loan?

In my comment of 15.10.13 to your previous article on credit reports [1], I wrote, Your article indicates two astonishing issues:

1. Americans that were alarmed when they found out that the NSA collected some data, take it for granted that (at least) three private companies collect and store SENSITIVE PERSONAL INFORMATION. Moreover, Americans do not mind that their sensitive personal information is revealed to third parties.

2. Americans, both as individuals and as a nation, LIVE BEYOND THEIR MEANS. Thus, the vast majority of Americans take it for granted that they have a credit report.

Readers who do not find the above astonishing are, most probably, Americans.

It is little wonder that U.S. Government Debt is about 75% of the GDP (compared with about 30% in China, about 35% in S. Korea and Taiwan, etc.) and that the U.S. Government is on the verge of BANKRUPTCY.

Posted by:

Daniel Wiener
27 Feb 2014

I have my electronic calendar set to remind me to check my credit reports annually, with the three different credit bureaus scheduled four months apart from each other. That way I'm always within four months of spotting anything really unusual that got reported to all three, and a year within spotting a problem with only one. So far I haven't had any significant problems, but I strongly agree with you that it's an important precaution to take.

Posted by:

Adrienne Brietzke
28 Feb 2014

Carole is very correct. Had a couple of 'revolving' accounts on our Equifax report that showed being open but weren't. Once was with my bank; the report gave all but the last 4 numbers. I contacted BofA thru their secure messaging system from my account. Got a moron who first told me I had no authority on the account, then asked me if I had the last 4 numbers because it would be very difficult to find without them. I first noted for him that I was one of the two NAMES on the account, using their secure messaging system - what the hell was he talking about. Then told him to READ my e - I've specifically stated that I didn't HAVE the last 4 numbers. Then told me they couldn't do what I was asking. I explained the wonder of computers to him and suggested that because we'd been with the bank for many years and they were the ones reporting this to the credit companies - a little research with our various id numbers would undoubtedly come up with something. I then contacted Equifax about it; they told me they couldn't change it either. I said "you're telling me that while you and BofA can communicate about this erroneous report, you CAN'T communicate to fix it?? I filed a dispute on that account and another. They came back with the BofA account having been closed but that they'd 'verified' the other account was still open. I called the 866 number for that account they Equifax provided in their own report. Talked to the lady at the company; she researched it while I was on the phone with her and verified it had been closed for years. I asked her to give that info to Equifax. She told me they weren't authorized to do that. Again - they could communicate about WRONG information, but they couldn't communicate about correcting it. Major FUBAR. I then had to file another dispute with Equifax to get them to fix the first dispute that they'd screwed up. The amount of time I've had to dedicate has been considerable. -TO FIX THEIR MISTAKES!!! They're very uncooperative in helping. Finally, I've tried to get an Experian report, since I usually check all three and they're usually the worst at correct reports. They want to charge me $1 to get it - and of course, I'd be immediately signed up for their protection plan on a trial basis, blah, blah, blah. It's ridiculous. The intelligence level of the people I've been dealing with concerning our credit is astonishing. They're idiots! And definitely bent on NOT helping! This is an obscene 'trick' used by them and the companies they serve to jack up interest rates by keeping mistakes on their records and keeping credit scores low. So not only do we have to be vigilant about thieves - we have to deal with MORONS and rules that make absolutely no sense!

Posted by:

Paul E. Wog
28 Feb 2014

Yes! I know the difference, but like Adrienne says, "We have to deal with MORONS and rules that make no sense!" My credit reports are correct and haven't changed but my credit score has dropped 40 points from 720-680 in the last 6 months. My mortgage has been paid down 6K in that time frame also. What's happened? "That makes absolutely NO sense!"

Posted by:

01 Mar 2014

Bob, the part about an employer checking one's credit report seems.....odd? Why in blue blazes would an employer even remotely care about that?

Posted by:

02 Mar 2014

The Solution is a credit freeze
By blocking the ability of a credit reporting agency or bureau to sell your data, you eliminate the bulk of credit-based ID theft.

A "thaw" is when you open access to your report for someone. Freezing is cheap, but thawing has a per-use cost. if you filed a police report or a FTC complaint of identity theft in the past, you can provide that to the CRCs to have your freeze and thaws for free for life!

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