Check Your Reports Before CFPB Takes Aim at Data

Many Americans of all financial backgrounds have likely taken steps to get a better handle on their credit standing in the past several years since the onset of the recent economic downturn, but some may have run into a serious obstacle if they had unfair markings on their credit reports. Now, however, the federal consumer watchdog says it will soon begin cracking down on these issues.

Earlier this month, the federal Consumer Financial Protection Bureau issued notices to companies that supply consumers with copies of their credit reports and other related data about the ways in which they have to ensure that all items listed on these documents is as accurate as possible. Of course, a 100 percent accuracy rate for all consumers with credit in their names nationwide is likely an unattainable goal, but nonetheless, many experts have suggested that companies could do more to make sure all data listed for borrowers is as accurate as it possibly can be. The reason for this renewed emphasis on accurate information was that a report issued late last year found that an electronic system used by the nation's three largest credit monitoring bureaus did not allow those companies — Equifax, TransUnion, and Experian — to forward documents from consumers about disputes to the companies that issued the original information.

"Credit reports play a critical role in the lives of consumers," said CFPB director Richard Cordray. "Given the importance of these reports, consumers need to know that their documents are being reviewed when they dispute what they believe is a mistake on a report. Today's bulletin helps ensure that the right people will be doing just that."

However, even with an increased regulatory scrutiny on the companies issuing this credit-related data to the three major bureaus, the fact remains that unless consumers are regularly taking the time to ensure that they're not being adversely affected by any such entries on their own documents.

How can you tell?
The only way to truly know whether there are any unfair markings dragging down your credit standing is to first order copies of your credit reports from one or more of the three major reporting bureaus, and checking them over closely. If, in the course of doing so, you spot any items that you don't recognize or which you feel are not entirely accurate (for example, if there is a balance listed for more than you think you owe), you should contact the credit bureau which issued the report you checked over, as well as the financial institution that controls the account in question.

Once you have done so, you should also order your reports from the two remaining bureaus to make sure the potentially problematic issue does not appear on those documents as well. If it does, however, you will need to repeat the above process. During this time, you might be asked to provide proof that the entry in question is in some way unfair, and this may not always be easy, particularly if there is an entry related to an account you do not know anything about.

If you are having any particular amount of trouble having these issues cleared up as quickly or easily as you would like, it might be wise to contact a credit repair company about the situation. This may allow you to have the issues sorted out more expediently than before, and thus allow you to get back to the stronger credit standing you deserve.

Other steps to take
Of course, just getting unfair markings removed from your credit reports probably isn't the only credit fix you need. You will likely also need to reduce the instances of late payments on your report by making more on-time contributions to your debts on every account for at least several months. Further, you might also do well to increase the size of those monthly payments to more quickly cut into your outstanding balances. The total percentage of your overall credit limits that your debt takes up at any given time — known as your "credit utilization ratio" — will start to bring down your score once it eclipses 30 percent of your maximums.

These two factors alone make up a total of 65 percent of your score, but are also fortunately the two that are easiest to smooth over if you've gone through any troubles with them in the past. Having the ability to sort out any issues related to debt and payment options, as opposed to the average length of time you've had all your accounts or the different types of credit you have, can be a boon for your standing in a relatively short period of time. If you take the time to approach these two issues wisely and with a well-defined plan, your credit scores will likely rise rather quickly.

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