I heard about a recent University of Missouri study about the prevalence of mistakes and errors in credit reports. Could you tell me more about that?

There was a recent study that was conducted by UMSL (University of Missouri at St. Louis) that looked into the prevalence of mistakes in credit files and credit reports. It highlighted the importance of checking your credit report carefully since even just for the section of personal information, around 12% of credit reports already contain errors. Add in the mistakes found in the areas of credit accounts or public records, this is a major problem with credit reports. Another great option to consider is credit monitoring services so that you are notified of changes in your credit file within 24 hours so that you can spot errors right away.

A common source of errors with the personal information section of credit reports is family members having the same or similar names. A name with the Jr or Sr suffices can also be another source of confusions and errors. This can be a real problem with the credit report if you are not getting the proper notifications about negative items with credit and loan accounts so that you can fix them if they are mistakes. In essence, if every single person checked their credit reports regularly, they would be able to help each other spot mistakes if records are being amended to the wrong person’s credit reports. In other cases where the study found errors in a credit report, the actual source of the inaccuracy could not be determined.

What do I do if I do actually spot an error or inaccuracy on my credit report?

Now that we have highlighted that a very significant percentage of credit reports do contain errors, you should know how to fix those errors should you find any. When you do find an error in your credit report, it is very important that you go through the proper steps to fix those mistake entries. Each of the three major credit reporting bureaus in the US has their own procedures and steps for contesting information contained in your credit report. What you will want to do is follow their steps and send them a copy of your credit report with the items in question highlighted along with any proof or supporting documentation. All items that you send to the credit bureau you should make copies of and keep.

Once the credit bureau receives your inquiry, they are required by law to investigate the matter. They will notify you of the findings about your credit report and whether those items you are contesting are actually errors. If they do find that an inaccuracy needs to be corrected, they will send you a revised and fixed copy of the credit report, as well as notify the other two credit reporting agencies that such a fix has occurred. Even in the cases where the credit bureau does not find in favor of you and will not change the item in questions, you can still request that a note of evidence of your submitted notice of error contest be included with each copy of your credit report that is requested from that credit bureau.

How much of an effect can mistakes or errors in my credit report actually affect my credit score?

There is no limit to how much of an adverse effect errors and mistakes on a credit report can hurt someone’s credit score. Imagine someone having an impeccable credit file suddenly adding mistakes entries of bankruptcies and loan defaults on their credit file — would their impeccable credit history and credit score be ruined?

In the actual cases of the University of Missouri at St. Louis study about credit report errors, those participants who found errors went through the steps to fix those errors with their credit bureaus. Once those mistakes were fixed, the study administrators asked for the updated credit scores from the agencies. In some of the cases, the corrected credit scores went up as much as 40 points. This is a fairly significant difference, as that 40 point swing can mean the difference between a loan approval and denial, as well as differences in what rates and terms a loan can have if you do get approved.