Beware of Lenders’ Mistakes on Your Credit Report
If your lender has allowed you to defer your credit card, car loan, or mortgage payments during the pandemic, you’ll want to check your credit reports for errors more often, perhaps once a month. Lenders are increasingly mistakenly labeling invoices as overdue or overdue , and this can do a lot of damage to your credit rating if you don’t pay attention.
Why is this happening?
Errors in credit reports have become a growing problem in recent years, as borrowers often complain that repaid loans appear to be unpaid, or that individual loans are reported multiple times.
However, with the pandemic, millions of people have become eligible for deferred payments on their loans, whether through the CARES (for mortgages and federal-backed student loans) Act or through private lenders who have voluntarily taken similar measures. This only exacerbated the problem of errors: the number of complaints about errors reached a record 86% compared to the previous year.
And mistakes can be costly. Since the borrower does not expect the error to affect his credit rating, he may not notice it until the next time he applies for financing or a loan. The timing can come as an unpleasant surprise as it forces the borrower to settle for less favorable interest rates when they are most needed. As loan officer Herb Weisbaum told ABC News :
“It’s a nightmare, and in fact, if you have a good credit history and miss one late payment, the only late payment that can lower your score by as much as 100 points, and it will take you a long time for that account to come back.”
How to check and fix your credit reports
You can request credit reports from all three credit agencies, Equifax, Experian and TransUnion, through Annualcreditreport.com . You can get these reports for free every week until April 2022.
You will need to search for errors line by line. If you spot one of these, you will need to write a non-compliance letter to the appropriate bureau, preferably by certified mail, requesting a return receipt (see this Lifehacker post for additional error correction tips). Unfortunately, it usually takes 30 to 45 days for credit bureaus to respond, if not longer, due to the pandemic.