How Accurate is a Credit Report?
A credit report is used all the time to help determine a person’s creditworthiness. However, did you ever wonder how accurate a credit report really is?
Supposedly 80 to 90% of all credit reports do have serious errors on them. This does not even include the minor errors that may show up from time to time.
This information that was released by the Government Accountability Office is likely to have opened up the eyes of many people. This shows consumers that although credit reports and credit scores are quite useful they are not a perfect measure of someone’s financial past.
How Mistakes Happen
According to one report mistakes happen in the process of handling a credit report. Of course, part of the reason for inaccuracy is that a consumer can enter wrong information.
This may be because a person is trying to commit identity fraud or it could be that a person is trying to falsify info on his or her own credit report. Either way, it leads to excess errors.
Another reason errors are found on credit reports is because creditors and merchants may record inaccurate information. This could happen even if a consumer provides the right information, but then this info is passed on incorrectly or is failed to be reported at all.
Sometimes it could simply be a result of information provided by consumers not being entered into systems in the right format. This often causes the miscalculations and misreporting that leads to the false impression that an otherwise responsible consumer is not creditworthy.
Credit bureaus are also sometimes responsible for errors on credit reports. Either inaccurate information is placed on a correct file, or accurate information is placed on the wrong file.
Prevention Tips
Check and double-check any loan or credit application you fill out. Putting in false information even by accident can cause you problems.
Furthermore, never put your financial records or personally identifiable information in the hands of those who could wrong you. You also can seek a free copy of your credit report at least once a year, as you are entitled to at least that.
If you see an error that you know is not your fault then you can seek removal of it. There are credit report letters you can send and there are many templates available to create them for free.
Agencies also can prevent errors as they make extra sure they enter in information accurately. It also helps if there is accountability, such as a third party inspecting all credit reports.