There are common errors that can appear on your credit report and drag your credit score down. You may need to repair these errors. Some may seem to be errors, but the information is actually accurate. How they came to be is the real issue. Certain repairs can be fairly easy to fix, while others may require getting professional help to get the job done.
1. Incorrect Payment History Reported by the Creditor
It sometimes happens that creditors report their credit experience with you incorrectly. For example, they may report a late payment that was in fact on time. Some may even report past due balances that never happened.
One of the most damaging credit entries is rolling late payments. That can happen when you miss a single payment. The initial late payment is a legitimate derogatory event. But when you make the next payment, the creditor applies it to the original unpaid monthly payment. The net result is that your account will be considered late for a second month in a row.
This can go on for many months. For example, you may see a pattern of 10 or 12 consecutive 30 day late payments on one credit card. Where you actually only had one legitimately late payment, the creditor is reporting “12 x 30 days late”. That can have a heavy negative effect on your credit score.
2. Mistaken Identity
This happens when someone with a similar name has a bad credit item that is attributed to you. It can also happen because of an incorrect Social Security number or a common address. The derogatory information is likely correct, but it’s been applied to you in error. As such, it will negatively affect your credit score until it is removed.
3. Cosigned Loans
Whenever you cosign a loan for someone else, there is a risk of that person making late payments or failing to totally satisfy the loan. In either case, the derogatory information will appear on your credit report. There’s nothing you can do about that, because you accepted liability for the loan at the time you cosigned for it.
There may be late payments reported error too, but the primary borrower has not corrected them. The loan may still be showing as unpaid, even though it actually was paid. Since you are not the primary borrower on the loan, you may not have been apprised of your situation.
4. Ex-Spouse or Family Members
It’s not unusual to have common credit accounts with your spouse or another family member. And if a spouse becomes an ex-spouse, his or her derogatory credit may continue to be reflected on your credit report.
Divorce decrees usually specify that certain debts are allocated to each former partner. That situation is often not sorted out for months or years. You’ll have to have your name disassociated from the loan or credit line.
That can still leave you with derogatory information in the interim. You may have to provide a copy of your divorce decree to prove to the creditor that your responsibility legally ended on the account as of the date of the divorce decree. Sometimes they’re sympathetic, but not always.
5. Identity Theft
Though we normally think of identity theft as the across-the-board, it often involves a single account. Sometimes the perpetrator is an outsider, and sometimes it’s a family member. Whatever the source, if an account has been opened using your identity, and the account goes sour, it will show up on your credit report.
6. Information That Hasn’t Been Updated
Creditors are sometimes notoriously slow to report updated information. It could be months or even years before they report error corrections, or paid balances. This can be especially true of collection accounts. Many do not report the payment of such accounts unless you’ve contacted them several times, or threatened legal action.
7. Duplicate Negative Entries on the Same Account
This can happen when a loan or credit account changes hands. If you have a couple of late payments with Bank A, and they sell your loan to Bank B, you may end up with two banks reporting the same late payments on what is virtually the same loan.
A more common situation occurs with collection accounts. Let’s say that you have a past-due balance of $500 on a department store charge card. The department store charges off the debt, and shows the collection on your credit report. They then sell the collection account to a collection agency, who also reports a charge off.
If the balance remains outstanding long enough, the collection agency may sell the collection to yet another collection agency. At that point, there will be three separate entities reporting the same $500 collection against you. Fixing this can be…involved.
8. Incorrect Closed Account Information
This can happen even with creditors with whom you have a very positive business experience. Even if you’ve never had any late payments, and paid the loan in full, the creditor may nonetheless report either late payments or an unpaid outstanding balance. This can happen due to clerical error, or even confusing your account with that of another customer.
Unfortunately, incorrect information on closed accounts can be one of the most difficult types of credit errors to fix. Not only is the account no longer active with the creditor, but you may have no recollection or paper trail that will help your cause.
Given the variety of credit errors that can happen, as well as the different degrees of difficulty involved in repairing them, you may need to get legal help repairing your credit. This will be especially true if you have problems with multiple accounts, and even more so if you have either a high level of debt, or a generous number of legitimate derogatory entries.
As you can see in the case of closed accounts and collections, bad credit doesn’t get better with age. It takes time, effort, and specific know-how to sort all these problems out. On your own, it can take hundreds of hours over many months to fix. In many cases, your best – or only – option will be get legal help to clean up your credit properly.
If so, don’t delay. The sooner you fix credit problems, the better the results will be.