Why Your Credit Score Might Be Better Than You Think
Your credit score is not perfect. This might come as a shock to some and less so to others, but here is the deal; not one person or one thing in this world is perfect. Except Neiman Marcus cookies; Neiman Marcus cookies are perfect. There, I said it. That’s not the point, though. To get back on track, most people think that their credit score is pretty much the end of the story. No more discussion, do not ask again; but it’s not. Your credit score is a report of all your credit history and information but you have to remember that no one is perfect. That includes the creditors that report your information to credit bureaus. That also includes the people at the credit bureau whose job it is to go through your information and input it into whatever system they use to report credit scores.
What does this mean? This means that humans are making up your credit score, and that means that there could be a mistake or two. Now, we are not going to say that your credit score is an inaccurate report of what your credit history really looks like, but we are going to tell you that it is a good idea to get that checked out. You know how people tell you that you should check your score every few months or twice a year? That’s a good idea; and it’s not just to see if there is any fraud or stolen identity issues going on, either. It’s to see if there are any mistakes. The faster you find them, the faster you can have them fixed.
Mistakes happen; we are all human. We all make them, and we all have a chance to fix them at some point. So, don’t just assume your credit score is what it is; assume that there could be some issues on the report and that you can fix them with a few simple phone calls.
Know Who Is Involved
When you are dealing with your credit score, you are not the only person involved in the transaction. Additionally, it’s not just you and the credit bureaus, either. It’s you, the credit bureau, your creditor and the people who are pulling your credit to see if you qualify for anything in particular. That’s four sets of hands from four different places playing with your credit score on a regular basis; and that leaves a lot of margin for error. Since none of us is perfect, we cannot be perfect all the time. This means that somewhere, someone might have make a mistake on your credit report that isn’t costing them anything, but is costing you everything.
With so many people in your report at any given time, it is no wonder many people see that there are mistakes on their report. However, it’s important to also remember that many of the mistakes that are on credit reports have nothing to do with the credit bureau making a mistake. This is why you have to know who all is involved. We are not saying that the credit bureau does not make mistakes when entering information, but we are saying that if the mistake is not one they made when reporting your credit, it is one that was made in reporting it to them by a creditor. This is why so many people must be contacted and involved in the process at any given time.
If you are given a copy of your credit report, you can contest some of the items on it, but you now have to know what you can contest. This information is going to help you learn what can and cannot be contested on your credit report, how to handle the contesting of any particular item and how to manage things on your credit report.
What You Can Contest
- Incorrect Items – Obviously, if something on your credit report is incorrect, you have every opportunity to correct that statement by calling the credit bureau or the creditor who misrepresented something. For example, let’s say you just took out a mortgage to buy your first home. Your mortgage is approximately $250,000. However, when you check your credit report, the amount you financed for your home is listed as $2,500,000. Someone clearly added an additional zero to the mortgage amount by accident, but that affects you. For one, your debt to income ratio probably looks crazy right now, and that probably had a very negative impact on your credit report. What you would do is call the credit bureau and fax them a copy of your actual closing documents and mortgage statement to show them that it’s been reported incorrectly. They will happily fix that for you right away.
- Incomplete Reports – Here is another really great aspect of your credit score to consider. The credit bureau does not always report the details of a transaction. Let’s use this example; you paid for a big ticket item by financing it and you did not pay it in time. You were 40 days late paying for it. That is something that is going to show up on your credit report. Now let’s say that the item you purchased was shipped to you and it was not correct, so you were given permission by the company not to make your payment on the item until the correct one shipped. However, the report to the credit bureau was already made and there was no note on that transaction that you were given permission to pay late because the wrong item was shipped. If you can prove that, you can fix that. Incomplete items like this have to be removed from your credit by the credit bureau.
- Unverifiable Information – Here’s the deal here; if a creditor cannot prove something, you can have the credit bureau remove it from your report. This is not something that we are telling you to do to misinform the credit bureau, but we are telling you that anything can be contested on your credit report. What that means is that you can call them up at anytime and suggest that a bill you paid late 5 years ago was not actually late. The credit bureau will then notify the creditor, who has to prove them in a certain amount of time that the bill was paid late and that this does belong on your report. Since many companies close, merge, destroy documents after a certain amount of time or just lose things, it’s often difficult for creditors to prove older items like this, meaning you can have it wiped off your report if they cannot prove it.
What To Look For
There are a few things you have to look for when you are going to check your credit report. These details might not seem like a big deal at all, but they are all a big deal. Even the most minute mistake in your credit report, such as a number slightly off on your address or a misspelled name might make all the difference in the world on how your report is being managed. Here’s what to look for.
- You name is correct and spelled without any incorrect initials, without an incorrect middle name; it must all be correct
- Your address is correct
- Your social security number is correct
- Your birthday is correct
- Are the past addresses on your credit report the correct
- Are all the credit reports on your account yours
- Are they correctly listed
- Do you see anything that does not belong to you
- Are each of the payoffs and amounts listed correctly
- Do you see late payments
- Does anything look incorrect
- Are the credit limits listed correctly
- Are accounts still open or closed and listed as such
- Are the negative items on your account still there even though they’re old
It’s exceptionally important that you check for old accounts that you did not pay or pay off in time. For example, if you went through a financial difficulty in 2007 when the economy was rough and you were out of work and you stopped paying some credit cards, are they still listed? The law requires that any negative items on your credit report are only allowed to stay there for 7 years. This means that anything listed more than 7 years ago has to come off right away. Things like bankruptcies, however, are required to stay on your report for 10 years, so those will have to be left alone.
How To Make Your Case
Now that you have gathered all the information that you need to understand how a claim is made, you have to figure out what steps to take to dispute the claim. Sometimes it might be as easy as calling the credit bureau and faxing over the correct information so that they can see where the mistake was made, but sometimes it is a lot more complex than that.
The first step is to identify the issues and make sure they are, in fact, correct. Now that you have decided that something is worth disputing, go ahead and gather all the information and evidence you need to contact both the creditor and the credit bureau. Explain your case, present your evidence and let them finish it up with what they have to do to prove their evidence.
We recommend that you do your due diligence and send your paperwork with a registered return receipt so that you can prove they were received should either the bureau or the creditor attempt to claim your information did not arrive by the time it was supposed to arrive.
It’s a good idea to include all copies of your information along with a photo of the issue on your credit report, or even a copy of your credit report. Now include a short letter than asks them to do what you want them to do; fix the issue or remove the mark from your credit report. It is important to remember that putting your claim in writing is a good idea because phone calls sometimes require that you surrender some of your own rights as far as legalities are concerned.
The credit bureau might not make the creditor that you are disputing prove that a case is accurate; they will take their word. This is why it’s so imperative that you contact both at the same time. This makes it so that the creditor is forced to show you proof of their own evidence. If they cannot show you proof, they cannot file the claim against you and it will have to be removed from your credit report.
Finally, credit bureaus are required to notate in your report that you disputed a claim, which is something that potential employers, potential creditors and anyone who has looked at your credit in the past two years must be notified about, which could change their decision on something that has to do with you. It’s a good idea to dispute anything that has your name on it and is not correct; you usually win if you can prove the issue more so than a creditor can disprove the issue.
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