High Price for Errors
FORT LAUDERDALE, Fla. — A Federal Trade Commission study showed that about 26 percent of people have credit reports mistakes that could lead them to pay more for loans, insurance and other financial products. Debt.com advises consumers to obtain an annual credit report to correct inaccurate information and take steps to improve their credit score.
More than a quarter of participants in the study found at least one error on their credit reports, and five percent had errors serious enough to affect loan terms. “Credit reports play a crucial role in determining consumers’ financial discipline and responsibility,” said Howard Dvorkin, CPA and Chairman of Debt.com. “Detecting credit report errors allows consumers to correct inaccurate information that could potentially lead to denied loans and high interest rates.”
Dvorkin encourages consumers to review their credit reports and advises consumers to:
Correct errors on credit report: Consumers should check their credit score at least three months before making a purchase. If they identify mistakes, consumers should write a letter to the credit bureau and organization responsible for reporting the inaccurate information. In the letter they should explain why the information is incorrect and what should be changed on the credit report.
Ask for a credit-line increase: The credit utilization ratio is one of the major factors that contribute to the overall credit score. Using too much of the available credit, can have a negative impact on a credit score. While it’s possible to fix this issue by paying down debt, sometimes consumers may not be able to afford it. To avoid having a low score, consumers should call their card provider and ask for a reduction of their interest rate. This could help consumers to pay off their balance quicker.
Consolidate your debt – Another quick way for consumers to improve their credit score is to consider consolidating their credit card debt. This can make it easier to pay down debt and also increase the average age of revolving credit lines, which can help the credit utilization ratio.
– Obviously, consumers shouldn’t add an installment loan to their credit portfolio just because, but if you they are in need of a student or personal loan they may be able to quickly improve their credit score. Creditors want to see that you consumers can handle a wide array of debt, so having this type of loan can be beneficial. If consumers are in dire need of improving their score, taking out a small personal loan that they can pay back over time could help.
Use an old card – If consumers have a card that they haven’t used in a while, they can start making purchases with it again. Not using a card for an extended period of time could lead to credit card providers no longer reporting it to the three major bureaus. By simply using an old card, consumers can increase their credit utilization ratio and extend their history, both of which can boost their credit score.