Quick Answer
If credit report errors lower your credit score, you may face higher borrowing costs, credit denials, housing challenges, and other financial consequences. Common errors include incorrect late payments, accounts that do not belong to you, duplicate debts, and identity theft-related information. Identifying and disputing inaccurate information may help restore your credit profile and score.
How Inaccurate Information Can Affect Credit Scores
Inaccurate information can negatively affect credit scores by altering your perceived creditworthiness. For instance, debts that don’t actually belong to you or payments falsely marked as late can lead to a lower credit score.
Why Even Small Errors Can Have Big Consequences
Even small credit report errorscan affect approvals and terms because every bit of data in your credit profile is pulled into the formula used to calculate your credit score. So seemingly minor errors, like an account marked open instead of closed, can feed false information into the calculation of your score.
What Types of Credit Report Errors Can Lower Your Credit Score?
Credit report errors that involve debts, utilization, payments, and similar can lower your credit score. For instance, incorrect late payments, duplicate debts, fraudulent accounts and information related to identity theft, and inaccurate balances can all have an impact. By contrast, having an incorrect name or other identifying information is a type of error that won’t necessarily lower your credit score (though it can have other impacts).
Incorrect Late Payments
Payments marked missed or late are typically weighted heavily by the credits scoring formulas, so false payment information can make your file appear risky and lower your score.
Accounts That Do Not Belong to You
These can happen because of identity theft or mixed files (someone else’s credit information co-mingled in your credit file).
Duplicate Accounts
Duplicate entries for the same account, loan, debt, or other information can make your total debt or credit ulitization appear higher.
Incorrect Collection Accounts
These can either erroneously show an account as unpaid and in collections or show an incorrect balance.
Identity Theft-Related Errors
Fraudulent accounts, balances, or payment history can make their way to your credit report following identity theft.
Incorrect Credit Utilization Information
Wrong balances or credit limits can inflate your credit utilization, which makes it appear as though you more heavily rely on credit without necessarily being able to lower balances.
How Can a Lower Credit Score Affect Your Life?
Lower credit scores can affect your life by impacting borrowing costs and rates, approvals, housing, insurance, and other decisions involving your credit history.
Loan Denials
A lower score may contribute to loan denials.
Higher Interest Rates
Lenders may offer higher rates or less favorable terms.
Credit Card Application Rejections
Negative information can contribute to credit card denials or lower limits.
Housing and Rental Challenges
Landlords and property managers typically use credit information in tenant screening reports as part of the rental application and decision process.
Higher Insurance Costs
Insurers may use credit-based insurance scores where allowed.
Employment Background Check Concerns
Credit errors may affect jobs that require credit checks.
How Much Can a Credit Report Error Lower Your Score?
There’s no set number of points. Impact can range from as little as 1 point to 100 points or more.
Impact of Late Payment Errors
Delayed housing, limited credit access, increased borrowing costs.
Impact of Collection Accounts
Inaccurate collections make credit profiles appear riskier.
Impact of High Utilization Reporting
Loan denials, rejected credit applications, higher borrowing costs.
Why Score Changes Vary by Consumer
Score changes vary because each credit profile is different.
How Can You Tell If a Credit Report Error Is Hurting Your Score?
You can tell if credit report errors are hurting your score by regularly reviewing your credit reports from all three credit bureaus and specifically investigating unexpected changes as they arise.
Review Your Credit Reports
Check for errors in accounts, balances, payments, and collections.
Compare Information Across Credit Bureaus
Compare Equifax, Experian, and TransUnion reports for differences.
Monitor Unexpected Score Drops
An unexplained score drop may signal a reporting error.
What Should You Do If You Find a Credit Report Error?
If you find a credit report error, document it, dispute the information, and keep records of the investigation.
Gather Supporting Documentation
Collect statements, payment records, identification documents, or other proof.
Dispute the Error With the Credit Bureau
Identify the error, explain why it is inaccurate, and provide supporting documentation. Send the dispute by certified mail and retain receipts.
Contact the Information Furnisher
You can also consider disputing the false data directly with companies that reported it. For instance, your credit card company.
Track the Investigation Process
Keep copies of disputes, responses, and updated credit reports, and track the timing of your dispute. The credit bureaus typically have 30 days to investigate and respond to your dispute.
How Long Does It Take to Correct a Credit Report Error?
A credit bureau generally has 30 days to investigate a dispute, although some investigations may take up to 45 days.
Credit Bureau Investigation Timelines
The bureau must investigate and provide results after completing its review.
What Happens After a Correction Is Made
The credit file should reflect the updated corrections.
When Credit Scores May Recover
Your credit score may improve after the corrected information reaches the scoring system.
Can You Recover From Credit Report Damage?
Yes. You can recover from credit report damage but it will likely take time. If errors caused the credit report damage and those errors are properly fixed, you should see a faster recovery.
Score Improvements After Corrections
Removing harmful inaccurate information may result in a higher score.
Reapplying for Credit After an Error Is Fixed
Pull reports from annualcreditreport.com and confirm the corrections before reapplying.
Monitoring Your Credit Going Forward
Regular monitoring can help identify recurring or new errors.
Do You Have Rights Under the Fair Credit Reporting Act (FCRA)?
Yes. The FCRA gives consumers rights involving credit report accuracy, disputes, and investigations.
The Right to Accurate Credit Reporting
Consumer reporting agencies (CRAs), which includes the credit bureaus, are required to make reasonable efforts to assure maximum possible accuracy.
The Right to Dispute Errors
You can dispute inaccurate or incomplete information.
The Right to Have Inaccuracies Investigated
Credit bureaus generally must reasonably investigate properly submitted disputes.
The Right to File a Lawsuit and Pursue Compensation
If your dispute is ignored or mishandled or you suffer harm caused by the errors, you have the right to work with an attorney and file a lawsuit to correct credit reporting errors.
When Should You Speak With a Consumer Protection Attorney?
You should consider speaking with a consumer protection attorney when serious errors remain unresolved or cause financial harm.
Errors That Remain After a Dispute
Continued inaccurate reporting after a dispute may warrant legal review.
Denied Credit, Housing, or Employment Opportunities
Speaking with a consumer protection attorney about the errors in your credit report can be invaluable when false information contributes to denied opportunities.
Significant Financial Harm Resulting From Inaccurate Reporting
An attorney can evaluate whether resulting losses may support an FCRA claim.
FAQs About Credit Report Errors and Credit Scores
Can a credit report error lower my credit score?
Yes. A credit report error can lower your credit score.
How many points can a credit report error affect my score?
There is no fixed number. It depends on how many errors appear and the nature of the errors.
Will my credit score go back up after an error is removed?
It generally should, though it depends on the errors and your credit file as a whole. For instance, removing unauthorized inquiries won’t necessarily have the same impact as removing accounts falsely marked as delinquent.
What credit report errors hurt scores the most?
Mixed files and false or inaccurate information about late or missed payments, debt collections, and high balances.
How do I know if an account on my report is inaccurate?
Compare it with your statements, records, and other credit reports.
Can a collection account error damage my credit score?
Yes, collection errors can damage credit scores.
How long does it take to fix a credit report error?
By law, it should typically 30 days, some take up to 45 days. In reality, it depends how long it takes for the credit bureau to adequately investigate your dispute and properly correct the information.
Can I dispute a credit report error online?
Yes, but certified mail is recommended to preserve your rights and keep the tracking of your dispute within your control.
What if the credit bureau does not correct the error?
Consider submitting more evidence, disputing with the furnisher, or getting legal help.
Can I recover compensation if a credit report error caused financial harm?
Yes, depending on the nature of the FCRA violations and the resulting harm.