Fall is upon us, and kids everywhere are heading back to school with a new attitude and commitment to education. Even if your school days are far behind you, it’s a great time of year to embrace that same spirit and start fresh. You can begin by pulling your credit reports to ensure everything is correct.
Why you should check your credit reports, even if you practice good credit habits
Good credit habits are essential for credit health, but they won’t necessarily be enough to keep your credit score high. Unfortunately, it isn’t uncommon to have discrepancies on your credit report. Here’s why you should check your reports every year:
1. There may be user errors.
The majority of credit report errors are caused by human error, either on the part of the consumer or the lender. These could occur for a number of reasons, like you accidentally transposing two numbers in your Social Security number or applying for credit under a nickname (“Dick”) instead of your given name (“Richard”). Or the lender may have made a clerical error while inputting your personal information. Regardless of how it happens, it’s a common occurrence that you should check for annually.
2. There could be duplicate information.
A duplicate credit report entry occurs when a credit account is reported more than once. This can be a problem because it may show you have double the debt and increase your credit utilization ratio.
Nerd Note: The majority of the time, “duplicate” student loan accounts aren’t duplicates by credit report standards. Student loans are often transferred between creditors, so make sure what you’re seeing isn’t a transfer.
3. You could have a mixed credit report.
If you have a similar name to another borrower, there’s a chance that your credit reports could be mixed up. Your reports could either be merged into one, or the two reports could contain information from both of you. This occurs frequently with parents and children who share the same name and address, so double check all entries if you happen to be a Junior or Senior, or have a Roman numeral after your name.
4. There could be incorrect negative items.
Most negative credit items stay on your report for about seven years, so it’s important to check for negative items that may be erroneous. If they’re accurate, there isn’t much you can do but pay them off and wait for them to fall off your reports, but inaccurate negative items can be removed once disputed.
Bottom line: This fall, you should pull your credit reports to ensure you’re on the right financial track. Regardless of whether you practice good credit habits, remember this: Human error, duplicate information, mixed reports and incorrect negative data can derail your score. Check for all of these on your credit reports annually — or better yet, three times a year — for free at AnnualCreditReport.com.
Stethoscope and credit report image via Shutterstock