01 Mar Credit Report Errors Cause Consumers Higher Interest Rates
After filing bankruptcy people are often interested in trying to rebuild their credit, and a Chapter 7 or Chapter 13 bankruptcy can be a good first step to repairing your credit.
The information contained in your credit report is important and that information must be accurate. Credit reporting agencies (CRA) such asExperian, Equifax and Transunion are the gate keepers between you and potential lenders.
That is why a recent report from theFederal Trade Commission (FTC) finding that the credit data collected by the three major credit reporting agencies (CRA), Experian, Equifax and Transunion, has an error rate of five percent.
The FTC study revealed the following:
- 1in4 consumers found errors on their credit reports;
- 1in5 consumers had an error that was corrected by a credit reporting agency (CRA) after it was disputed;
- 4out of 5 consumers who filed disputeshad some aspect of their credit reportmodified;
- About 1 in 10 consumers saw a change in their credit score after the CRAs modified their credit report;
- Approximately1 in 20 consumers had a maximum score change of 25 points or more; and,
- 1in 250consumers had a maximum score change of more than 100 points.
Errors on a credit report can have a major adverseimpact on a consumer. Some of theknownadverse effects are:
- Being rejected for credit
- Getting credit, but at less than favorable terms, such as a higher interest rate
- Being rejected for an apartment lease
- Being rejected for employment
- Being rejected for insurance or having to pay higher premiums for insurance
- Losing a security clearance
Since your credit report is so important, you should review it from time to time, but it is not necessary to pay to review your report.
The CRAs were required a number of years ago to set up a website where you can go to obtain a free credit report from each of the big three each year.
This site is known as annualcreditreport.com.
While you can get all three reports at once, you might want to consider getting one report froma differentCRA every 4 months since all 3 credit reporting agencies generally have the same basic information.
Also, remember that if you apply for credit and are rejected, you are entitled to receive a free credit report from the CRA that was used to deny credit.
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