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Credit Report Errors Can Lower Your Credit Score

by Ryan Guina

Have you checked your credit report recently?

A mistake on your credit report can drastically affect your FICO credit score. And since your credit report is a major factor in your credit score, and any errors found in your credit report will most likely show up in your credit score – affecting your ability to obtain a loan or new credit card.

A Credit Report Error Lowered My Credit Score!

A credit report error can affect your credit score

Correcting credit report errors can improve your credit score.

The following is an e-mail I received from a reader. One of the major credit bureaus had an error in his credit report that remained there for 8 years – causing his credit score to drop over 120 points from that respective bureau. Here is his story:

Question: I have a question regarding my credit score. I have a good salary, no defaults, and it has always easy to get credit. I checked TransUnion about six months ago and had a score of 740. Two months ago I applied for store credit card and was denied.

I checked TransUnion again, still 740. I then checked Equifax – 618!! Upon examining the respective credit reports I found that Equifax and TransUnion had identical details except that Equifax had a line of credit with a limit of $25,000 and balance of $50,000. TransUnion had the same LOC, opened in 2002 with the CORRECT details of limit 50k, balance 50k. Equifax had the wrong data for 8 years.

I wrote Equifax with necessary paperwork and my score went DOWN to 613. Seems my bank had noticed the error at the same time and advised Equifax two weeks prior to my letter that the account had limit of $50k. Equifax thus interpreted it as $25k of new credit so instead of eliminating my erroneous $25k over limit, and raising my FICO credit score, they dinged my FICO because of $25k new credit, a credit increase of 30% in one month.

I spent two hours on the phone with three different departments and all acknowledged that it was strange that I had a repayment history of category 1 (the highest) and yet fell into the highest loan risk. I have no actions on my file and have had and repaid loans in full and on time up to $500k. The staff acknowledged that the computer had indeed interpreted the $25k as new credit and there was no way that they could go back and correct the data prior to February as the data is now correct.

Is there anything I can do, and how long will it take this new credit to become old credit and increase my FICO score back to the TransUnion level?

Correct information will help you improve your credit score

Answer: It sounds like you did everything right regarding contacting Equifax to dispute the error in your credit report and sending in the correct information. I’m not sure I like their answer of “no way that they could go back and correct the data prior to February as the data is now correct,” but I’m not sure if anything else can be done on your end. The only suggestion I have is to contact Equifax again and see if they can fix the information in their version of his credit history.

As long as you continue to practice good credit habits, your credit scores will improve – but it will take time. How much time it will take is unknown. You may find this credit score breakdown helpful.

Continue to monitor your credit reports and credit scores

My other suggestion is to get copies of you credit report from all three major credit bureaus and check it for erroneous information more frequently. You can get a free copy of your credit report from AnnualCreditReport.com for each credit bureau once per year. If you stagger the requests you can get a free copy every four months. This will help you stay on top of your credit report to more accurately monitor what is held in your reports.

It may also be a good idea to check your credit scores from all bureaus to ensure they are similar. You generally have to pay for the credit scores, which often run from $5-15 each. However, you may be able to get a free copy of your credit score if you sign up for a credit monitoring service. Be careful when getting a free credit score. Many of them come with a free trial period in which you will receive free copies of your credit reports and scores, then they charge you after the trial period expires. Credit Karma and Credit Sesame both offer free credit scores without any trial periods. They do not charge you anything and don’t ask for your credit card information. Their credit scores are not the FICO scores, but they are based on information from the credit bureaus.

Does anyone have any other tips or advice on correcting credit reporting errors?


Published or updated October 29, 2012.
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{ 2 comments… read them below or add one }

1 Smarter Spend

I’ve actually disputed a few things on my credit card statement. If you do an online dispute, you get a response back very fast, sometimes within 2 business days and your credit score can shoot up!

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2 Daddy Paul

Transunion is just plain nasty. They had me as dead from 1996 to late 2009. I finally wrote a certified letter to their president that I was taking them to small claims court and they would need to prove I was dead. They fixed the problem really fast.

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