3 Mistakes to Watch for in Your Credit Score

Your credit score is one of the most important financial numbers in your life, influencing everything from loan approvals to interest rates. It’s crucial to regularly check your credit score and the information on your credit report to ensure it’s accurate. Even small errors can have a significant impact on your financial health. In this blog, we’ll discuss three common errors to watch out for in your credit score and how to address them if they appear.

1. Incorrect Personal Information

Your credit report should accurately reflect your personal information, including your name, address, date of birth, and Social Security number. If this information is wrong, it could indicate a mix-up with another person’s credit report, potentially affecting your score.

How to Spot It: Check the personal details listed at the top of your credit report. If any information seems incorrect or doesn’t match your records, it’s important to address it right away.

Why It Matters: Incorrect personal information can lead to misattribution of credit activity or identity theft. If another person’s credit history is mixed into yours, it can lower your score. Additionally, you may miss important notifications related to your credit if the contact information is wrong.

What to Do: If you notice any discrepancies, contact the credit reporting agencies (Experian, Equifax, or TransUnion) to have them corrected. You’ll likely need to provide supporting documentation, such as a utility bill or government-issued ID, to confirm your correct details.

2. Unfamiliar or Duplicate Accounts

Sometimes, accounts that don’t belong to you can appear on your credit report. This could be due to a clerical error, fraud, or identity theft. In other cases, you might notice duplicate accounts, which could unfairly impact your credit score by increasing your total debt or credit utilization ratio.

How to Spot It: Carefully review the list of credit accounts on your report. Look for any that you don’t recognize, such as loans, credit cards, or mortgages you didn’t open. Also, check for duplicate entries of the same account, which could appear due to reporting errors.

Why It Matters: These errors can negatively affect your credit score in multiple ways. Fraudulent accounts can lower your score if they’re associated with missed payments, high balances, or negative remarks. Duplicate accounts can inflate your credit utilization and debt levels, which may reduce your score.

What to Do: If you spot unfamiliar or duplicate accounts, file a dispute with the credit bureaus to have them removed. You may need to provide evidence, such as a police report in the case of fraud, or account statements to prove that the accounts are duplicates.

3. Missed or Late Payments That Aren’t Yours

One of the most common errors on a credit report is the incorrect reporting of late or missed payments. This could happen if a creditor mistakenly reports a payment as late, or if your payments are mixed up with another person’s account. Even a single late payment can have a significant impact on your credit score, so it’s important to correct any inaccuracies.

How to Spot It: Look at the payment history section of your credit report. Check each account for any payments marked as “late” or “missed” that you know you made on time. Compare the dates of the payments with your own records or bank statements to confirm whether they were properly reported.

Why It Matters: Late payments can significantly hurt your credit score. If a payment error appears on your report, it can make it appear as though you’re not managing your credit responsibly, which can make it harder to get approved for loans or credit in the future.

What to Do: If you notice any errors in your payment history, contact the creditor directly to request a correction. You can also dispute the error with the credit bureaus. Be prepared to provide supporting documentation, such as bank statements, receipts, or communication with the creditor, to prove that the payment was made on time.

Final Thoughts

Your credit score is a reflection of your financial behavior, but errors on your credit report can misrepresent your creditworthiness. Regularly reviewing your credit report for these common mistakes can help you spot inaccuracies before they cause long-term damage to your score. If you find any errors, take immediate action to dispute them with the credit bureaus or contact the creditors directly. Ensuring that your credit report is error-free will help you maintain a healthy credit score and improve your chances of securing favorable loan terms and credit approvals.

Remember, you’re entitled to a free credit report once a year from each of the three major credit bureaus. Take advantage of this opportunity to stay on top of your credit health and correct any issues that arise.