Experts agree that as many as 70% of all credit reports have errors. In addition, identity theft is rampant, so reading your own credit report often and checking for errors is vital to maintaining good credit scores.
Some errors, however, aren’t worth correcting, because they have no effect on your credit scores. Those include:
- Misspellings of your name
- Listing of an old address or an incorrect address
- An old employer listed as current
- Incorrect reporting of who closed an account – you or the bank
As long as those items aren’t tied to a new account that is clearly not yours, you don’t need to make the effort to correct them.
An address where you have never lived or an employer you’ve never worked for, on the other hand, could be a sign of identity theft, so should be investigated.
Errors that can affect your credit scores and thus should be corrected immediately include:
- Accounts listed as unpaid that were included in a bankruptcy
- Current accounts that clearly are not yours
- Negative items older than 7 years – or 10 years in the case of a bankruptcy
- Closed accounts listed as anything other than “paid as agreed” if you’ve paid on time and in full
- Credit limits reported as lower than the limit listed on your credit card statement
- Late payments, charge-offs, or collections that aren’t yours.
This last one could also be a sign of identity theft, so look into the source of the report immediately.
One caution – while it should always be beneficial to get your credit report clear of any negative information, removal of old items can actually lower your score.
The FICO credit scoring method groups consumers together in a very strange way. When your credit history is spotty you’ll be included in one of several groups, and when it’s clean you’ll be included in another group. You can be at the bottom of a group or at the top – based on all the components that go into determining a credit score. And your standing within that group will affect your credit scores.
Thus, removal of an old negative could move you from the top of one group to the bottom of another – and your scores will drop accordingly.
Remember, however, that you can’t attain the highest scores available as long as you remain in one of the “lower” groups. So even if you have a temporary setback, it’s still worthwhile to work on creating a clean credit file.
CreditScoreQuick.com
