The Cost of a Credit Report Error
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Credit report errors are all too common, and many times if they are small errors, you may just let it go, not know about it, or you may not know how to dispute the credit report error. In any case, one small credit report error could have serious consequences for your financial future.
Importance of Your Credit Score
Credit Report errors can have a serious effect on your credit score. Your credit score is a number created by credit reporting agencies that is put together based on the information found in your credit reports.
The most commonly used credit score is your FICO score. This score is used by lenders, banks, credit card companies etc. in order to determine the likelihood that you will repay your debt. It gives them an idea of how risky of an investment it would be to do business with you. FICO credit scores range from 300 – 850. The higher the score, the better; it shows that you are lower risk to lenders.
Errors on Your Credit Report Can Cost You Thousands
An error on your credit report can lower your credit score. A low credit score can be damaging and hurt you in many ways, including:
- Much higher credit card interest rates
- Higher home and car insurance premiums
- Higher home mortgage interest rates
- It can affect your U.S. government clearance
- Higher private student loan interest rates
- Loss of a job opportunity
- Denial of loan and credit offers
Each of these instances alone can cost you thousands and some potentially tens of thousands! Don’t throw your money away. Make sure that you check your credit reports for errors and get them fixed right away. Though credit scores are generally not free, you do have the right to request your score from credit reporting agencies. The three national credit bureaus, Experian, TransUnion, and Equifax, may each have a different credit score and credit report for you, since they all use their own databases, so it may be a good idea to request copies from all three. Under the FCRA you are entitled to request and obtain a free credit report from each credit reporting agency every 12 months.
How Your FICO Score Is Calculated
Your FICO credit score takes into account your financial history based only on what shows up in your credit report. They use both positive and negative information to create your FICO score. According to the Fair Credit Reporting Act (FCRA), negative information can show on your credit report for up to 7 years, and a bankruptcy for 10 years.
Your score is based on five categories and percentages of each category show the importance of that category:
- 35% – Payment History – most important factor; lenders want to know if you paid past credit accounts
- 30% – Amounts Owed – this takes into account how much a person owes on current accounts; it does not look bad to have open accounts, but depending on the amount, it may show that a person may be overextended and have a hard time making future payments
- 15% – Length of Credit History – generally a longer credit history will increase your FICO score
- 10% – Credit Mix In Use – your FICO score takes into consideration the mix of accounts you have open
- 10% – New Credit – If you open several credit accounts in a short period of time, this can make you appear risky
Knowing that your credit score is used by lenders, employers, banks, insurance companies, and rental companies, to determine what kind of risk you are, it is highly important that we get our credit reports anually and check for errors.
Hire Francis & Mailman to Dispute Credit Report Errors
If you have credit report errors that you cannot get removed and they are lowering your FICO score and in turn costing you thousands, its time to contact the consumer law firm of Francis & Mailman. Fill out our form or call us now for a free case review at 1-877-735-8600!