Outdated or Incorrect Information Could be Holding Back Your Credit Score

Credit is probably the most important aspect of your financial identity. Your credit score can tell lenders how trustworthy of a borrower you are, or how likely it is that they will make their money back. A good credit score can mean the difference between a low interest rate and an exorbitantly high one, and a bad enough score could even get your application for a loan dismissed entirely. There are a few major aspects that determine your score: length of credit history, total amount of debt, and the regularity of debt repayment tend to be the biggest factors. By adjusting those variables, you can raise or lower your score over time. According to an L.A. Times article by David Lazarus, changes to the largest credit agencies' calculation may have recently upped your score, but that doesn't necessarily mean it will stay that way in the near future.

Lazarus writes that some of the larger agencies recently went through their data, and removed a lot of incorrect or outdated information, which presumably improved the scores of those borrowers being held back by such data. But, even though some of the information has been expunged, that doesn't mean they got all of it. In fact, it doesn't even mean they got most of it. The three biggest credit agencies are Experian, TransUnion, and Equifax, and just like all corporations, these companies exist to make money.

Credit agencies serve a necessary purpose. Without them, lenders would have many difficulties figuring out who to lend money to. This would likely lead to them reducing the number of people they loan to, which would, in turn, prevent innovators from getting loans they need to start a business or undertake some other financial activities that could positively stimulate the economy. That being said, although they serve an important utility, the agencies tend to have a lot of outdated information that can be a terrible hassle to get fixed. Various borrowers have reported issues with misspelled business names, which can be troublesome if not disastrous. Many others have had issues with incorrect reports of a trashed apartment or a late credit card payment, which could wreck their credit scores for years to come.

It is very difficult to get such mistakes removed from your credit report. One study showed that over a quarter of customers had at least one potentially harmful error, and another study showed that even after those customers went through 3 years of paperwork, the majority of those errors still remain. Although the odds are not in your favor (at least the way current laws work), there are some steps you can take to fix issues with your credit score.
1) Submit an online complaint to the credit agency.
2) Contact the "furnisher" (the entity that provided the incorrect information).
3) If all else fails, hire a lawyer who specializes in the Fair Credit Reporting Act.

All of those options take time to sort out, but with enough patience, you should be able to eventually settle the issues associated with your account. Unfortunately, that could mean that you get stuck with very high interest rates for the foreseeable future. Try reaching out to your local lawmakers. Maybe with enough pressure from enough of their constituents, lawmakers may introduce policies that force the credit-reporting agencies to take customer complaints more seriously.

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