NEW YORK (3/19/13)--An error on your credit report can cost you more than just the time it'll take to correct it. That error also could result in a lower credit score, which could mean you'll pay higher interest rates on loans or be denied outright. Getting slapped with an undeserved high-interest rate happens to about 5% of consumers who have credit report errors (New York Times.com March 4).
Credit reports and credit scores, while different, work in sync. A credit report shows your credit activity over time. It shows if you owe money and to whom. It also shows whether you make payments on time or if you're late; it shows if you've stopped making payments altogether. Based on information in your credit report, a credit score is a three-digit number lenders use to assess whether or not to offer you credit and at what price. Negative credit information, accurate or inaccurate, can result in a lower score.
If you have a low credit score, you'll pay more to acquire a loan, but that's not the only way a low score affects your finances. A low score also can result in not being able to rent an apartment, get affordable insurance coverage, or get a job.
The first steps in making sure your score is the score you deserve are to review your credit report for accuracy and to report any discrepancies, according to the National Foundation for Credit Counseling (NFCC), Silver Spring, Md. Follow this advice to make sure your report is clean:
For help reviewing your credit report ask the staff at your credit union or call an NFCC member agency certified counselor. Call 800-388-2227 to be connected to an agency in your area, or visit DebtAdvice.org.
For more information about disputing credit report errors, read "Clean Up Your Credit Report" in the Home & Family Finance Resource Center.