Many Credit Reports Contain Costly Errors

One of the most common effects of living with the constant stress of too much debt is the eventual inability to even deal with one’s financial situation. As a bankruptcy attorney, I have talked to and counseled countless clients who have told me that after a certain point they just stopped opening their mail. This feeling of helplessness in the face of mounting debt is what has led many people to my door seeking the financial relief and fresh start that bankruptcy can provide.

A new study recently released shows just how harmful ignoring your financial situation can be. The Federal Trade Commission conducted a study whereby they examined the credit reports of over one thousand consumers. After reviewing the reports, it would found that about 25% of the credit reports contained errors which could have an impact on the consumers credit score. This negative effect on a consumer’s credit score in turn could lead to higher interest rates on loans for vehicles, mortgages and the like. Although the study was small, it is estimated that at least 10 million people could be paying higher interest rates on loans due to inaccuracies on their credit report. If you are one of those 10 million, the financial impact could be huge.

So what can you do to protect yourself? Well, the first step is to pull your own credit report once a year from each of the three major credit reporting companies. These companies are TransUnion, Equifax, and Esperian. Under federal law, you have the right to access your credit report from each company once a year for free. You may do this by using the website www.annualcreditreport.com. However, this free credit report will not contain your credit score. If you want your credit score you will have to pay for it. Once you have pulled your credit reports, you must then review the reports for accuracy. If you find an error, the next step is to dispute the error in writing with each of the credit reporting agencies. Each agencies website will have directions on how to dispute errors. They may give you a number to call but it is very important to establish a paper trail so be sure to put all requests in writing as well. Finally, if the reporting agency disagrees that it is an error and refuses to fix it, you may add a paragraph to your credit report explaining your side of the story.

Once you have reviewed your credit report and cleared up any errors, it is important to continue monitoring your credit. I recommend signing up with one of the credit reporting agencies in order to receive notifications if there is a change in your score, or financial activity. This will help protect you from identity theft and will also show you what type of activity will affect your credit score. Some other tips on improving your credit score include the following: make your credit card payments on time all the time; pay down your credit debt; don’t constantly move around your credit debt from one car to another; don’t close unused cards in an effort to increase your score; be careful to keep you debt to credit limit ratio below 30%.

If after reviewing your credit report you realize that you just don’t have the resources to pay down your debt or make your payments on time, it might be helpful to contact a reputable bankruptcy attorney to explore other options.

The Law Offices of Melanie Tavare is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code