What Credit Report Errors Cost You – Rejected for a Loan or Credit Card and Don’t Know Why?
Can you imagine shopping for your new home, test driving your next vehicle or applying for a loan to jump start your business only to get stopped in the process because your credit doesn’t make the cut. You wonder, how can that be when you’ve always done everything right to maintain a good credit score but the errors on your credit report tell a different story.
Credit report errors can damage credit scores and limit an individual’s financial opportunities yet not only do they keep happening, the number of complaints reporting errors to the Consumer Financial Protection Bureau has doubled since 2019.
CPA and personal finance expert Howard Dvorkin tells us more about the growing issue.
The credit reporting system is way too complex. It sounds like it should be simple, track
your debts and see if you pay them on time or pay them off at all. Lenders use a variety of methods in order to judge your credit worthiness. Some are complicated mathematical algorithms and some frankly are just reviewing your payment history and some also include reviewing the amount of total debt you have existing at the time you try to get a loan.
In a survey conducted by Consumer Reports earlier this year, 34 percent of respondents said they found at least one error after checking their credit report and those errors aren’t an easy fix but two bills in congress are hoping to change that. The comprehensive credit act and the protecting your credit score act.
There’s a bill in congress right now called protecting your credit score act. It will create one website where you could check your credit score for free at any time. It would also force those credit bureaus to tell you who they sold your information to. Finally, it would make it much easier for you to fix mistakes that appear on your credit report. Consumer Reports says one-third of all credit reports have mistakes.
The end goal is to ensure that consumer reporting agencies are reporting accurate information, but Dvorkin says the solution may not be that simple.
Part of the problem with this act is making the government part of the solution. In the three decades I’ve been a CPA and financial counselor, I’ve seen so many laws pass with the best intentions and terrible execution. Let’s be honest, congress is considering the protecting your credit score act because its previous legislation didn’t solve this problem. I do think forceful negotiations with credit bureaus is a wonderful idea however telling them what to do without consulting them is likely to backfire. It could just create another confusing situation that will require another act of congress to fix.
Dvorkin urges consumers to frequently check their credit scores and quickly dispute any errors.
