Consumers May Pay High Price for Errors on Credit Reports
FORT LAUDERDALE, Fla-A Federal Trade Commission study showed that 5 percent of credit reports have mistakes that could lead consumers to pay more for loans, insurance and other financial products. Consolidated Credit advises consumers to obtain an annual credit report to correct inaccurate information and take steps to improve their credit score.
The study showed that one in four consumers identified errors on their credit reports that might affect their credit scores and approximately one in 20 consumers had a maximum score change of more than 25 points.
Credit reports play a crucial role in showing your financial discipline and responsibility. Detecting credit report errors allows consumers to correct inaccurate information that could potentially lead to denied loans and high interest rates.
Consolidated Credit encourages consumers to review their credit reports for free by going to www.annualcreditreport.com. We also advise consumers to:
Correct errors on credit report: Consumers should check their credit score at least three months before making a purchase. If they identify mistakes, consumers should write a letter to the credit bureau and organization responsible for reporting the inaccurate information. In the letter they should explain why the information is incorrect and what should be changed on the credit report.
Ask for a credit-line increase: The credit utilization ratio is one of the major factors that contributes to the overall credit score. Using too much of the available credit, can have a negative impact on a credit score. While it’s possible to fix this issue by paying down debt, sometimes consumers may not be able to afford it. To avoid having a low score, consumers should call their card provider and ask for a reduction of their interest rate. This could help consumers to pay off their balance quicker.
Consolidate your debt: Another quick way for consumers to improve their credit score is to consider consolidating their credit card debt. This can make it easier to pay down debt and also increase the average age of revolving credit lines, which can help the credit utilization ratio.
Take out an installment loan:Obviously, consumers shouldn’t add an installment loan to their credit portfolio just because, but if they are in need of a student or personal loan they may be able to quickly improve their credit score. Creditors want to see that consumers can handle a wide array of debt, so having this type of loan can be beneficial. If consumers are in dire need of improving their score, taking out a small personal loan that they can pay back over time could help.
Use an old card: If consumers have a card that they haven”t used in a while, they can start making purchases with it again. Not using a card for an extended period of time could lead to credit card providers no longer reporting it to the three major bureaus. By simply using an old card, consumers can increase their credit utilization ratio and extend their history, both of which can boost their credit score.
Consolidated Credit is one of the nation”s largest credit counseling and has helped over 5 million people with financial issues. Their mission is to assist families throughout the United States in ending financial crisis and solving money management problems through education and professional counseling.