What to Look

You're looking for errors, but what kinds of errors? There are more kinds than you might imagine, such as:

  • Inconsistency. Do the reports differ significantly from each other? Does each report accurately show your credit accounts along with an appropriate "open" or "closed"?
  • Late payments. Make sure that all late payments shown were in fact late. Also, check the category of lates—30, 60, 90 days or over. Sometimes creditors overstate the number of days payments have been late. Watch for rolling lates; you miss a payment, then get back on schedule. Every subsequent payment may show up as late.
  • Balances. Verify that the outstanding balances and credit limits don't adversely misstate your credit position. When balances push against limits, your credit score goes down.
  • Disputed claims. Have you justifiably refused to pay any creditor's bills? Health clubs and other service contract providers often continue to bill, and report as unpaid, fees for membership that customers canceled long ago.
  • Credit experience counts. Do the reports accurately indicate the length of time each account has remained open?
  • Omissions. Have you established excellent credit with a credit card, landlord, or retail merchant that does not show up in your credit files? Some creditors fail to report excellent payment records and balance information. Why? If your credit score goes up, that lender's competitors will mail you offers to switch to their better terms or higher limits.
  • Tax liens. Typically, before your loan closes, you must pay liens.
  • Judgments. Ditto for judgments unless the statute of limitations has passed.
  • Collections/write-offs. Ditto for collections and write-offs, subject to the statute of limitations.
  • Time limits. Does any derogatory information violate these legal time limits? The limits are: credit inquiries (two years); foreclosure (seven years); lates, collections, write-offs (seven years); judgments and tax liens (usually until statute of limitations runs out). To calculate time limits, work back from the date of last activity on the debt. (In some cases, the time limits for reporting begin to run 180 days after your last payment.) Also, creditors often sell their bad debts to credit collection vultures. These outfits may improperly report debts beyond their lawful date of removal. Beware: You can trigger a new time limit by partial payment or settlement. The bankruptcy reporting clock starts on the date of discharge, not the date of filing.
  • Other information. Verify all other information, such as names, addresses, employment, date of birth, and so on.
  • Consistency with application. Remember, your loan underwriter will compare the data in your credit files with the liabilities and other information you list on your mortgage applications. Do they match up? Can you credibly explain variances?
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