Credit reports help gauge your credit score and overall financial health. Any error, no matter how small, can potentially hurt your credit score.
Sadly, credit report errors happen more frequently than you think. Findings show that around 44% of people found errors in their credit reports. Below are five common credit report mistakes to keep an eye out for.
Incorrect personal information
Seemingly inconsequential mistakes like a misspelled name or an incorrect address may lead to bigger problems down the line. Wrong personal information, including phone numbers or ID details, can cause your account to get confused with another person’s account.
Incorrect number of accounts
Getting your information mixed up with someone else’s, also known as a mixed credit file, can lead to an incorrect number of credit accounts under your name. An incorrect number of accounts may inflate your debt-to-income ratio. This can skew your credit score negatively if the other person is not careful with managing their credit.
Incorrect payment status
Even if you pay your credit cards on time, make sure to still check the payment status. The time or date of the payments may say differently. For example, a balance that you have paid off on time might be marked as a late payment or even unpaid.
Incorrect account balances
You want to ensure that any payment you make not only correctly reflects your date of payment but also your balances afterward. Check your credit report to ensure you have no outdated loan amounts or overdue credit card balances.
Wrong account balances can lower your credit utilization ratio. In turn, this can significantly affect your credit score calculation.
Incorrect credit limits
Credit reports can get credit limits wrong. A lower credit limit can be just as damaging as incorrect account balances.
If you have a lower reported credit limit, your credit utilization looks much higher. In short, it seems as if you are using up a higher percentage of your credit limits. Experts generally suggest only using up to 30% of your available credit whenever possible.
Don’t be afraid to ask for help
There is no shame in asking for help. Whether you simply want to dispute and correct any mistakes on your credit report or repair your credit, a trusted legal professional can help you straighten out your credit situation.