Beware of Lender Mistakes on Your Credit Report
If your lender allowed you to defer paying your credit card, car loan, or mortgage during the pandemic, you’ll want to check your credit reports for errors more frequently, perhaps once a month. Lenders are more and more often mistakenly labeled as overdue or overdue, and it can cause a lot of damage to your credit score if you don’t pay attention to it.
Why is this happening?
Errors in credit reports have been a growing problem in recent years, as borrowers frequently complain about repaid loans showing up as unpaid or individual loans repeatedly reported.
With the pandemic, however, millions of people have qualified for the deferment of their loan payments, whether through the CARES Act (for mortgages student loans) or through private lenders who have voluntarily adopted similar measures. This only made the error problem worse, with complaints about errors reaching an all time high –up 86% over the past year.
And mistakes can be costly. Since a borrower doesn’t expect a mistake to affect their credit rating, they may not notice it until they apply for financing or a loan. The timing can be a nasty surprise, as it forces the borrower to settle for less favorable interest rates when they need it most. As credit expert Herb Weisbaum said ABC News:
“It’s a nightmare, and in fact, if you have a good credit history and miss a late payment, one late payment that can drop your score by up to 100 points, and it will take you a lot of time for this score to go up.
How to check and correct your credit reports
You can request credit reports from the three credit bureaus, Equifax, Experian, and TransUnion, via annualcreditreport.com. You can get these reports for free every week until April 2022.
You will want to search for errors line by line. If you spot one, you will need to write a letter to the relevant office about the discrepancy, preferably by certified mail, with acknowledgment requested (for more tips on correcting errors, see this Lifehacker post). Unfortunately, it will typically take 30 to 45 days for credit bureaus to respond, if not longer, due to the pandemic.