Do you know your credit report score? Ever checked your credit report for mistakes?
A national survey conducted by the non-profit Public Interest Advocacy Centre found that 18% of the people surveyed found mistakes in their credit report and 10% of those believed they were denied financial services because of those errors.
Mistakes on credit reports resulting in false credit scores can cost consumers thousands of dollars. An investigation by CBC News a few years ago found that credit reporting errors have not only prevented consumers from getting loans, lines of credit and credit cards, but consumers are charged higher interest rates. Many people have collections recorded on their credit reports without their knowledge and only find out when they apply for some type of financing.
How can this happen? Easy. The two credit reporting agencies – TransUnion Canada and Equifax – are inundated daily with hundreds of pieces of information with regard to consumer accounts and payment histories. That information comes from companies such as phone service providers and banks. These companies pay a fee for the bureaus to track clients and in return the credit bureaus provide the companies with access to consumer credit reports, which contains information from all the reporting agency’s client companies.
These are the most common inaccuracies:
- Mistaken identity, whereby a collection gets registered against the wrong consumers – this usually happens when names are similar
- Numerous undischarged items under public records
- Unverifiable late payments
- Incorrect names, DOB, SIN
- Statute of limitations with collections and other debts
- Discovering you have a collection reported when you’re applying for financing can impede your chances of approval, or at least cost you higher interest or fees. Either way, most lenders will want confirmation the debt it is paid before they lend to you.
The easiest way to confirm payment is to get a letter confirming the account has been settled in full or the account balance is now at zero. Please make sure to keep this letter for at least six years because collections have been known to come back on your report even after you have paid.
Mistakes on your credit reports even impact your ability to qualify for a mortgage. A regular review eliminates any surprises when you’re looking to buy or refinance a home. Your mortgage professional can help you access your report and offer advice on how to remove inaccuracies and how to improve your credit score.
Consumers can also request their credit report information via mail or online. Credit reports via mail are free but do not include your credit score. Credit reports and scores area available online, for a small fee. For more information visit Equifax at www.equifax.ca and TransUnion at www.transunion.ca.
This article belongs to TMG The Mortgage Group website