A credit report can have a lot of different types of errors in it. Information comes from a variety of sources, and it comes in at different times. All of the information is compiled and joined into one place. Because of the complexity involved, it is not surprising that errors happen. Some types of errors are more frequent than others. This section highlights some of the more common errors, as well as a few of the not-so-common errors. If you have errors in your credit reports, start by looking for these culprits:

• Transposed Social Security Numbers (123-45-6789 instead of 123-54-6789)

• An authorized user is listed as the account owner

• Transposed first and middle names (John Paul Doe instead of John Doe Paul)

• Nicknames create mix-ups

• Names are spelled incorrectly

• Similar names get mixed together

• Similar but different Social Security Numbers get mixed together

• Different generations get mixed together (Paul Jr.'s accounts with Paul Sr.'s)

• Outdated delinquencies still appear (bankruptcies older than ten years)

• Multiple listing of the same account (especially delinquent accounts)

• Illegally reaged collection accounts

• Customer erroneously listed as deceased

Some of these errors can be extremely persistent. Even after getting them removed, they might pop up again. If they keep coming back, you really need to dig into the details and find out where they're coming from. Either a creditor keeps reporting the release information about you, or the credit-reporting company keeps mixing you up with somebody else.

Studies Show

A variety of different studies have attempted to understand how accurate credit reports really are. The results vary. However, studies performed by independent or government bodies (in other words, not by a private company who might be biased) all show that credit reports are full of errors. These errors might be present in all of your credit reports, one of them, or none of them.

A 2004 study by the Public Interest Research Group showed that 29 percent of credit reports had serious errors. These were errors that would result in a creditor denying your application for a loan. For example, failure to pay (or pay on time) a bill, or an erroneous public record (such as a bankruptcy, tax lien, or judgment) would fall into this category. This same study found that 54 percent of credit reports “contained personal demographic identifying information that was misspelled, long-outdated, belonged to a stranger, or was otherwise incorrect” (“Mistakes Do Happen.” National Association of State PIRGs. 2004).

Other studies have also found errors to be quite common. A 2002 study by the Consumer Federation of America looked at differences between your credit reports from the three major credit-reporting companies. Not surprisingly, your credit score differs depending on which credit-reporting company supplies the data. This is because not all lenders report to every credit-reporting company. However, the differences are still quite dramatic. Thirty-one percent of people had credit scores that differed by fifty points or more. Five percent had scores that differed by 100 points. Fifty or 100 points is enough to change the interest rate that you pay on a loan.

Do You See What I See?

When a company takes an adverse action against you, such as denying your application for credit, you are entitled to a free copy of your credit report. Unfortunately, you may not see the exact same credit report that your lender looked at. Further, you may not see all of the information that was used in calculating a credit score. How are you supposed to figure out what caused the denial of credit?

Credit reports are generated whenever somebody asks for one. The credit-reporting companies don't just keep them lying around, sitting on a shelf ready for quick delivery. They are created in response to a request. Depending on how the request is made, the delivered report may be more or less accurate.

When you get a copy of your credit report, you are probably quite specific in providing your personal information. You know how to spell your name, and you get your Social Security Number right. The credit-reporting companies require you to prove that you really are who you say you are. However, they're not as restrictive with lenders. A lender can get your credit report with your name and Social Security Number only. Because the lender is less specific, the credit-reporting company is less restrictive in weeding out records that don't belong to you. Therefore, it is likely to be less accurate.