You will often hear it said that it is important to check your credit report a few times a year. This will help you determine if you are in a good position to apply for a large loan such as a mortgage. And it will also give you a warning if there is any fraudulent activity that you may have been the victim of.
While reading your credit report, you may come across some errors. Unfortunately, credit report errors are actually quite common. And these three things could end up having a negative impact on your credit score.
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1. Past due debts that you already have up to date
Your payment history – the extent to which you are on time to pay off your debts and obligations – carries more weight than any other factor in calculating your credit score. So if your credit report lists overdue accounts, it could easily hurt your score.
It is possible, however, that debts may be listed as past due on your credit report that you have already paid off or are up to date. If you see a debt listed as unpaid and you know you have paid it off, contact the credit bureau reporting this error and provide any documents you have that show the debt has been settled.
2. Accounts you never opened in the first place
Having too many loans or open credit card accounts can hurt your credit score. So if you see an account listed on your credit report that you have never opened, you will need to investigate.
Your first step should be to call the bank or credit card company behind that account and confirm with them that they show an account listed in your name. If so, you may have been the victim of fraud. If they don’t show an account opened in your name, ask for a letter to that effect that you can share with the information desk in question.
3. Incorrect loan or account balances
Another important factor that goes into calculating your credit score is your credit utilization rate. This ratio measures how much of your available revolving credit you are using at one time.
A higher ratio is not good for your score, so if your credit report says you have a $ 5,000 balance on a credit card when you know you only owe $ 2,000, it is something that you will want to correct. In this situation, providing the reporting office with your last credit card statement should do the trick if that statement clearly shows that your balance is much lower than the amount shown on your credit report.
It’s important to stay on top of your credit report whether or not you apply for a large loan. It’s a good idea to check your report every three months and make sure mistakes aren’t hurting you.
Normally, you can request a free copy of your credit report each year from each of the three major reporting bureaus – Experian, Equifax, and TransUnion. Right now, however, credit reports are free on a weekly basis until April 2022. So if you want to do a little more investigation, this is definitely an option worth considering. used.