Over 70% of consumers identify errors on their credit report. Twenty-five percent of those are serious enough to deny consumers and business owners access to credit, preferred interest rates or even a job. by Jeff Mandel CEO & Marlin Brandt COO, iQual Corporation
There are over 13 million inaccuracies on credit reports each year. These errors include everything from misspelled names and incorrect lender ratings to other peoples credit accounts (good or bad) and non-paid debt. One study finds fifty-four percent of credit reports sampled had personal information errors alone. Thirty-percent had credit account errors such an account closed by a consumer but at least one of the credit agencies (Experian, Equifax & TransUnion) are still showing the account as open. In almost every case the overall credit score of the consumer is negatively affected.
It’s contemptible to think that three out of every four consumers have at least one error on their credit report. However, with over 54 billion credit updates occurring each year it’s very likely YOU may have errors that are negatively impacting your ability to get credit and/or causing you to pay unnecessary interest expenses. It is important to note that of the seventy plus percent of errors found by consumers on their credit report only about twenty-five percent have a material impact on a consumers credit profile that that substantiates a correction or change says Jason Olerich, Director of Business Development of First Advantage CREDCO, the largest aggregator of data in the world.
If you are one of the many millions of consumers affected by this challenge, you will understand that identifying that an error exists on your credit report is only the first step. First, most consumers have no idea they have an error on their report because they rarely if ever review their credit report until they have a need to get a loan. By the time this occurs, a consumer typically has less than 45 days before they need their loan funded and their ability to get a single valid error corrected within this timeframe is marginal at best. Second, the far majority of consumers don’t understand the impact of a credit error or know the steps to get the problem corrected. Third, the process of cleaning up a valid error is very time consuming and challenging.
Although many companies have been formed to provide consumers easy access to their credit reports and/or give them alerts when their credit profile is affected (i.e., FreeCreditReport.com, LifeLock, etc.), they do essentially nothing to help the consumer understand their report, its content and more importantly what to do about improving their entire credit (including rectifying valid errors).
The credit agencies (bureaus) are responsible to assist in assuring there are no errors on a credit report. However, their service is reactive versus proactive. Meaning a consumer needs to identify if a valid error exists and then they need to begin working with the creditor(s) and credit agency(ies) to resolve these challenges. This process is very time consuming and cumbersome.
So what should a consumer do? First, a consumer becomes educated and informed about how credit works. Second, they need to continually review and evaluate their credit profile to ensure they proactively evaluate activity impacting their profile to assess its validity as well as opportunities to reduce interest rates on their credit products. Third, when a questionable activity is identified, the consumer should make sure they understand it and correct any valid errors. In most cases, consumers begin by filing a dispute with the applicable credit agency who is reporting the information. It takes time but who wants to be turned down for a loan OR unnecessarily get a higher interest rate on car, home or credit card due to a credit error.
It’s important to note that whether you are a business owner, real estate professional and/or consumer, as a result of the current market conditions, the need to proactively understand, evaluate and optimize your credit profile has never been greater.
Sources: ApprovalGUARD.com, First Advantage CREDCO, Public Interest Research Group, CNN Money News, Consumer Reports
Posted by marlinbrandt 