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Credit mistakes we are not guilty of

By Karen Anderson
Published: Friday, November 26th, 2010

How you handle your finances is one important aspect of your life that can generally influence the rest of you. Your credit worthiness is an asset that you must be able to protect to keep up with this credit-oriented world. Hearing stories about auto loans or mortgages being declined just because people have low credit scores is a common thing bad credit records can result to but the scope of what it can influence has widen.

Today about 35 percent of employers are making use of credit reports as their pre-employment assessment for applicants. Now it is not just your bank that uses credit report to assess your interest rates for loans, not only your insurance company that utilizes your credit score to determine the rate you should pay on car or homeowners insurance but now there are others who dip with the use of this record of your credit to justify one thing or another.

Well that is reality and the best that we can do is to work on building our credit worthiness. However despite our efforts of making a spotless credit record there are “unavoidable” circumstances that would give us bad credit records thus low credit score just because of mistakes we are not guilty of.

Credit reports are not perfect documents although the sensitivity of information they cradle, if badly handled, can pierce through a person’s entire life. There are several studies made since 1990s and all found careless practices credit bureaus are guilty of that can lead to errors on credit reports.

The most recent study revealed that 79 percent of credit reports existing carry errors. This is seriously alarming. The study found that a bulk of 54 percent of these credit reports contain wrong personal information.  Wrong addresses, misspelled names, incorrect dates of birth, wrong spouse name are common among the mistakes credit reports have.

Another huge percentage of these erroneous credit reports involve wrong information about accounts. Based on the study, 30 percent of credit reports contained error of recording accounts as open where in reality those accounts were already closed.

Alarmingly 25 percent included serious errors like accounts that do not belong to the person and records of delinquencies he/she is not responsible of. This can really lead to denial of loans or credit.

There are also errors of duplication. According to the study 22 percent of the credit reports have errors of this type, recording same loan two times for instance. The remaining 8 percent contained incomplete data since major loan, credit or mortgage were not recorded accordingly. This information can actually help consumers show their worthiness to credit however since it is not written on the records, it does not exist.

These errors whether big or small are threats to our reputation as a whole thus we must act now that we know what errors can invade our credit report. Human or computer errors are defended by credit bureaus considering the vast amount of information they are handling day in and day out. There can be as much as 4.5 billion updates processed by 30, 000 data processors monthly therefore there several chances for errors to occur.

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