You may hear credit firms advertising their “credit protection” services, but it is a misnomer to say that they protect consumer credit in a preventative way. While there are smart choices that YOU can make about your own behavior in the marketplace, a credit firm is not going to be able to prevent errors that third parties cause from showing up on your credit reports.
Remember, they are promising credit protection to lure you in the door, but they cannot ensure that mistakes on your future credit reports will not happen.
Through no fault of your own, errors can appear on your credit reports at the three major credit bureaus – Equifax, TransUnion and Experian – that could make you look like an extreme credit risk. This could prevent you from getting credit, loans or mortgages; or lenders may require a higher interest rate to do business with you based on the false projection of you as a bad credit risk.
Poor credit scores from erroneous reporting can also negatively impact how you look as a candidate for a job or a security clearance or an applicant for insurance or leases.
Monitor your credit reports for inaccuracies
At annualcreditreport.com, federal law allows consumers to access their reports from the three main credit reporting agencies each once annually. It is a good idea to space out the three pulls over a year’s time. You should carefully review each entry on a report for accuracy and currency.
The kinds of errors that could appear include:
- Wrong personal identifying information such as name, address, phone, Social Security number and similar items
- Inaccurate account numbers
- Debts or liabilities that you do not recognize as yours from a credit reporting agency mismerging your report with that of another person, through identity thief use of your identity and credit, by a relative or friend who is an authorized user running up excessive debt or through other causes
- Payments reported late that were timely
- Accounts showing balances that you paid off
- Errors in debt balances
- Credit accounts showing as open that you closed or vice versa
- Inaccuracy of relevant dates of account events (date opened, payment dates, late payment dates)
- And others
Promptly pursue corrections
The Consumer Financial Protection Bureau (CFPB), one of the federal agencies enforcing federal consumer protection laws, provides information and detailed direction at the above link (and further connecting links) about how to seek correction of these errors. For example, you can report the problem in writing to the appropriate credit bureau, which must investigate nonfrivolous complaints.
You can ask the furnisher of the inaccuracy (such as a lender or credit card company) to send a correction to the credit bureau/s. If they dispute the truth of the information, you can ask the credit reporting agency to provide information about the dispute if they release the information.
You can also file a complaint with the CFPB itself.
Error correction promotes subsequent credit protection
Once the credit bureau/s removes erroneous information that damages your credit score from your credit reports, your score normally begins to self-correct, or rise, over time. In this way, your future credit rating is better protected through regular and ongoing report monitoring plus swift action to correct mistakes.
It is smart to behave responsibly in your financial behavior such as by protecting yourself from identity theft through keeping your private identifying information, account numbers and passwords safe. When you take on a loan or other credit agreement, be sure to remain current and comply with its terms. Work with credit card companies and financial institutions that provide customer protections against fraud and identity theft.
Any Virginian seeking correction of credit-report errors or legal remedies when bureaus or furnishers are not cooperative should seek the advice and representation of an experienced lawyer. In addition, an attorney can analyze whether further legal action may be available against furnishers or others who have harmed you in this process.