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Lenders use your credit score and the information on your report to decide whether to approve loans and what kind of interest rates to set. Unfortunately, if you have an imperfect credit score due to recurring late or missed payments, overdue loans, files for bankruptcy or years of high credit card balances, you may not be able to obtain loans without paying seriously high-interest rates, which could only exacerbate your debt problem.
However, while uncommon, credit report errors can also negatively impact your credit score, so if you think your report contains any mistakes, you need to take action quickly. Credit bureaus can’t legally change any accurate information, and they won’t change supposed errors without substantial evidence. However, if you can have mistakes corrected promptly to reflect your credit history more accurately, you may soon have a higher credit score and access to lower interest rates.
Watch Out for These Errors
Mistakes on your credit report can not only affect your score but also indicate attempted identity theft in particular scenarios. Needless to say, errors need to be addressed quickly, so obtain reports from Equifax, Experian, and TransUnion and check for these mistakes:
- Personal information errors, such as a wrong date of birth or incorrect mailing address.
- Mistakes in loan or credit account accounts, i.e., payments shown as late that you made on time.
- Negative account information that should’ve expired (you can check how long negative information is legally allowed to remain on your report here).
- Accounts you never opened – this could be an indication of identity theft.
If you suspect you’ve been a victim of fraud, it’s wise to put a fraud alert on your credit report. Contact Equifax, Experian, or TransUnion to put an official alert on your account that tells lenders to confirm your identity before approving loans or any other applications for credit.