February 10, 2022
Shawn Lane
Consumer Credit Expert
For many people, credit bureaus seem like static, unchanging entities. It would certainly be comforting to think that the organizations in charge of determining credit scores have everything under control.
But these companies are anything but perfect – and that may be putting it mildly.
Credit bureaus have been receiving an increasing number of consumer complaints, and some experts are worried about this downward trend in customer satisfaction. Here’s why credit bureau dysfunction can be such a problem for consumers, and what you can do to protect your own credit.
The Problem with Credit Bureaus
2019, the credit bureaus had a 25% success rate in handling customer disputes. But in 2020, the percentage fell to 2%. This significant shift should be very concerning for consumers – especially those who plan to take out a major loan like a mortgage.
Part of the reason for the drop is that many more customers took out loans in 2020 to take advantage of historically low interest rates. But some experts say this represents a looming problem in how credit bureaus handle customer disputes.
Why Mistakes on Credit Reports Are a Huge Problem
When you apply for a loan, line of credit or credit card, the lender will review your credit report and credit score. They’ll look for possible red flags like missed payments, loans in collections, liens, bankruptcies, evictions, and defaulted loans.
If you have one of these negative marks on your credit report and it isn’t accurate, you may be denied a loan. If you are approved, you’ll likely receive a higher interest rate. Depending on the loan amount, this may result in you paying thousands or even tens of thousands more in interest – all because of a mistake on your credit report.
What Consumers Can Do
If you’re in the market for a loan, check your credit report from all three credit bureaus several months before you’re ready to apply.
Go to www.AnnualCreditReport.com, the official site for credit reports, and request your credit report from all three credit bureaus. Normally, you can only get one free copy a year, but since the Covid-19 pandemic began, customers can request a free copy once a week from each bureau. Although the credit reports you receive from this site are very detailed, the process is a bit cumbersome because you must request each credit bureau report individually, and these credit reports do NOT include credit scores.
A better option would be ordering a 3-bureau credit report from a credit monitoring company, such as ID Club. If you order this report using the link on our website (www.frscredit.com/creditmonitoring), you will receive your report immediately for just $1 for a 7-day trial period ($19.95 per month thereafter). This report will show you all 3 credit bureaus side-by-side in a clear and concise format which will be easy to read and understand.
Next, review your reports carefully and note any discrepancies. If you see an error, file a dispute with the credit bureau either yourself, or by engaging a company like FRS Credit. You can also contact the original provider and file a complaint with them. For example, if a medical bill that you paid was reported as being sent to collections, contact the hospital billing department, and ask them to revoke it.
Follow up with the provider every few weeks until it is removed. If they aren’t making progress, call them out on social media. Believe it or not, public shaming can often lead to faster results. If you only contact the credit bureau, it may take longer to have the error removed.
Also, you must file the dispute with every credit bureau where you see the mistake. That’s because the credit bureaus operate independently of each other.
After you’ve disputed the error, set a reminder in your phone or calendar to check on the status in approximately 40 days. If the mistake is still on your report, contact the credit bureaus again and ask for an update. You may have to repeat this process several times before the mistake is removed.
To prevent some mistakes from occurring, consumers can freeze their credit. This involves contacting the three credit bureaus and requesting a credit freeze. When your credit is frozen, no one can access your credit report except your current creditors. This prevents hackers from accessing your credit report and trying to open a credit card or loan in your name.
A credit freeze will not prevent all mistakes from appearing on your credit report, but it will reduce the potential for fraud.
If you have any questions or need help improving your credit, schedule a free credit analysis with a Financial Renovation Solutions credit consultant today.