3 common credit report errors you should be aware of

To make sure you get the most favourable terms on a loan, it's vital that you check your credit report for errors and resolve any problems before applying for credit. According to a study conducted by the Federal Trade Commission, around 5% of consumers have credit report errors that could make it more difficult for them to secure credit. 

Errors can happen for a few different reasons, so let's take a look at three of the most common credit report errors to look out for when checking your credit score.

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1. Incorrect accounts

One of the most common errors found in credit reports is incorrect accounts. The term accounts refers to the lines of credit you have open, including credit cards, retail cards, instalment loans, car loans and mortgages. Sometimes credit bureaus can accidentally input incorrect data when creating your accounts, and this can result in someone else's debt being mistakenly attributed to you. 

Another explanation for an incorrect account is that you've become a victim of identity theft, where someone has purposefully opened a credit account in your name. If your credit report includes accounts that shouldn't be there, the amount you appear to owe could be much higher than what you actually owe. This could have a significant impact on your credit score.

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2. Duplications

Sometimes the same debt is listed on a credit report more than once. This may be an error accidentally generated by the credit bureau when producing the report, or by the creditor when reporting a debt to the bureau. Duplication errors ultimately double the amount that you owe for that particular debt, so it's vital that it’s resolved before you try to apply for further credit. 

Keep in mind that in instances where you've defaulted on a debt and a creditor has sold it to a collections agency, this will generate multiple entries for a single debt. This is not considered a duplication error and there's nothing you can do about it. If the collection agency then goes on to sell the debt to another party and this generates multiple entries of the same debt, these count as duplications and should be removed. Whenever debt changes hands, new owners can enter it on the credit report but only one entry on the report should reflect the outstanding balance of that debt.

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3. Incorrect balances

Balance errors relate to the amount of outstanding debt on an account or the credit limit of an account. Errors like this can occur when accounts are initially created with inaccurate information, or if incorrect data has been listed when payments have been made or missed. 

Inaccuracies relating to dates of opening or payment dates could also lead to balance errors. It's wise to keep your own record of payments so that you can cross-reference account balances on your credit report. If outstanding debt balances on your report are significantly higher than what you really owe, your credit rating could be sorely impacted.

Resolve errors before applying for credit

If you've noticed errors on your credit report, it's vital that you get them resolved as soon as possible. You can gather evidence of the error and submit it with a letter to the credit bureau that created the report. Be sure to resolve the error before applying for further credit to ensure you get the best possible terms with an accurate credit score.

Published: 27 November 2023