If you haven’t checked your credit report lately, chances are it could be costing you.
The Federal Trade Commission just completed a lengthy study that found that one in four people have errors on a credit report offered by at least one of the three credit reporting companies – Equifax, Trans Union, and Experion.
Ryan Lauer, of Columbus, first noticed something wrong with his credit while looking to buy a house a few years ago.
“I would have a credit score go up 100 plus points without any new activity on my side,” Lauer said.
Lauer couldn’t tell what was wrong simply by looking at his credit reports, but with the help of police he came to learn it was the work of an identity thief.
“An individual was using my Social Security number, but with their own name,” Lauer said.
Even if you’re not the victim of identity theft, the FTC study found that 5 percent of consumers found errors on their credit reports that were damaging enough to significantly change their score, costing them time and money.
“There was a point where I was paying cash for everything and I wouldn’t even consider opening a new loan or something or credit card because of the hassle,” Lauer said.
“It’s not a quick process,” said attorney Robert Duff, owner of Indiana Consumer Law Group.
Duff, who previously worked for a law firm that represented Trans Union, now works to help people trying to correct the errors on they find on their credit reports.
Duff says the most important thing everyone should do first, is to find out if there are errors that could be negatively impacting them. You can do that by checking your credit reports regularly. The credit reporting companies are all required by law to offer one free credit report to consumers every year. You’ll want to request yours through www.annualcreditreport.com to avoid any added monthly services or fees. Experts suggest staggering the three reports throughout the year to better protect yourself.
If you find an error in any of your reports, Duff said the first step is to dispute it in writing. Although the credit reporting companies have an online dispute option, he said the best idea is to write a letter and send it using certified mail to keep record of it. Duff said it’s also a good idea to dispute the error with the original creditor.
If you do file a dispute, Duff said many people soon find that the process doesn’t always fix the problem.
“It’s largely automated and there’s no human in a dispute,” Duff said. “And so it’s very difficult to get a human to actually take a look at it.”
He said disputes are forwarded on to creditors without any documentation (even if you provide it) and if the creditor fails to agree with the alleged error, he said the dispute is rejected.
Duff said the problem is the credit agencies are in the business of selling their services, not helping the consumer.
“There’s no reason for them to dedicate more money to this issue,” Duff said. “And unfortunately they’ve not been forced to do so.”
He said consumers like Lauer are often left with little other choice than to sue the credit reporting company in order to get their good name back.
“It took about four years I believe to resolve mine,” Lauer said.