If you haven't checked out your credit report lately, it may spell trouble.
In a recent study by the Public Interest Research Group (PIRG), 29 percent of credit reports contained serious errors and 70 percent contained mistakes of some kind.
If serious errors show up on your credit report it could mean you get turned down for a home loan, a credit card, even a job, medical insurance, or apartment.
They can be corrected, but it often takes you to make the first moves.
The nation's three major credit reporting agencies refute the PIRG report, citing what they claim is unscientific methodology.
In the study, 155 PIRG employees and volunteers around the country sought copies of their own credit reports and checked them for errors.
The group studied 133 reports (it says 22 subjects never received their reports).
By contrast, industry sources cite a 1992 study of 10,000 consumers by consulting firm Arthur Andersen. There, only 0.2 percent of credit reports contained errors that resulted in a denial of credit.
"I don't think the [credit] industry would survive" if the country's 2 million mortgages and 4 million auto loans a year were based on grossly inaccurate credit data, says David Van de Walle, a spokesman Trans Union, one of three large credit bureaus.
The PIRG report had no corresponding figure on denials of credit.
The truth probably lies somewhere in between, says David Medine, associate director for credit practices at the Federal Trade Commission (FTC).
Serious errors on even 0.2 percent of credit reports is a huge number, several hundred thousand Americans. And the reports remain the No. 1 source of consumer complaints to the FTC.
"Perfection is unlikely," Mr. Medine says, "but a high error rate is unacceptable."
How errors creep in
Errors are usually introduced in one of four ways:
1. A bank or other creditor furnishes incorrect information to the credit reporting agency, usually if they have credited payment to the wrong account.
2. The credit bureau confuses files of creditors with similar names, or those of relatives or roommates. This happens especially if consumers omit a Jr. or Sr. from their name on a credit application or use different names - such as Robert and Bob - when applying for different accounts.
3. The bureau loses records of credit accounts in good standing, or credits them to other consumers.
4. Records of account payoffs are not up to date. Credit bureau records get updated only once a month.
One of the most serious sources of errors today is so-called identity theft.
These errors reach a wide audience, from lenders looking at loan applications to employers, insurance companies, and the like.
The three major bureaus, Experian, Equifax, and Trans Union, may not report negative information more than seven years old (or 10 years old for bankruptcies) in most cases. But if you apply for a job paying more than $75,000 a year, for more than $100,000 of credit, or for more than $150,000 worth of insurance, negative information may be reported indefinitely.
Plenty of people exceed those limits.
Congress tightened the Fair Credit Reporting Act last year to make lenders responsible for providing accurate information and require credit bureaus to correct false reports promptly.
The best way to keep errors out of your report is to be consistent on credit applications:
Always write your name the same way, including Jr., Sr., II, or III, if they apply.
Always write your address the same way, especially for streets such as 94th Place S.E.
Notify creditors and the major credit reporting agencies promptly of a move or name change.
But definitely do not hire a credit-repair agency to try to change accurate information, says Deanne Loonen, an attorney at the National Consumer Law Center in Boston.
Some credit agencies promise to "fix" black marks, even if accurate, by telling consumers to apply for credit in a different name, or to lie to get bad credit information removed.
Both are federal crimes.
In fact, there is nothing credit-repair agencies can legally do that consumers can't do themselves.
If you're denied credit or haven't checked your credit report for more than two years, contact the three major credit bureaus, listed in the box below.
If your record is less than snowy white, here's what to do:
Pay it up. If you are behind on payments, contact creditors and arrange to make them. You can't erase the black marks, but you can sometimes lighten them by turning overdue accounts into merely late payments.
Fix it up. If the information is erroneous, follow the procedure on the back of the credit report for disputes, and describe the evidence that the charges or accounts are not yours.
Unless your dispute is "frivolous," the credit bureau has 30 days to contact the creditor - such as a bank or loan company - to investigate the claim and respond to you. If the information was wrong, the creditor must correct it with all the bureaus that received the faulty facts.
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Who to call about credit reports
The Federal Trade Commission recommends inspecting your credit report every one to two years. You should ask for a report from each of the three major credit reporting agencies, because their information often isn't identical. Call:
* Experian (800) 353-0809
* Equifax (800) 556-4711
* Trans Union (800) 680-7293.
Reports are free if you have been turned down for credit, employment, or an apartment in the past 60 days because of information on your credit report.
You can also get a free report if you are on welfare, if you are unemployed and plan to look for a job in the next 60 days, or if you have reason to suspect someone has fraudulently used your credit.
Six states require credit bureaus to provide, upon request, one free report a year to residents of Colorado, Georgia, Massachusetts, Maryland, New Jersey, and Vermont.
Otherwise each report costs $8.