It seems simple enough; pay your bills on time and you should have excellent credit. But there could be mistakes on your report that you don't even know about... mistakes that could cost you thousands.
Kelli Leslie found out the hard way. She paid everything on time.
She had a 720 credit score.
But that was more than a year ago, before Kelli got turned down for credit.
It turns out there was a bankruptcy on her report.
She never filed bankruptcy. So why was she dealing with the consequences?
Kelli thought surely someone could fix it.
But days turned to months. She wrote a letter and says she called the credit bureau.
"I left them days of messages and no one to this day has contacted me back," Kelli says.
She says her credit score took a dive.
She didn't get the best rates anymore and some banks didn't want her business at all.
That wrong information turned up on her Experian report, along with Equifax and TransUnion.
The big three credit bureaus are so powerful that a late payment of 90 days can affect your credit for years.
And sometimes that information is just plain wrong.
Studies by groups like
U.S. PIRG show serious credit bureau mistakes happen up to 25% of the time.
While the bureaus say it's closer to two percent, that's still millions of people in situations like Kelli's.
"I cried myself to sleep at night you know, it was just a lot of stress," Kelli says.
Then Kelli met Mesa Attorney Hyung Choi and found there are three crucial steps to fight credit mistakes.
Choi says you first must go directly to the credit bureaus, not the creditors.
By law, the bureaus must investigate within 30 days, contact creditors in five days and give you a written answer.
Next, don't respond through the bureau's website or forms.
They are limiting.
Write a detailed letter and send it "receipt requested" for proof that you took that action.
Finally, thoroughly examine your credit report for clues, especially the "inquiry" section. That tells you who is looking at your credit and could be your first alert to someone else using it.
You can get
three free credit reports a year, one from each credit bureau. But you will be charged for the credit score.
Kelli's report shows mistakes linked to a bankruptcy.
Attorney Choi considered a name mix-up.
He checked public bankruptcy records and found it.
There was another woman with the same first and last names, but they were reversed.
So, Kelli Leslie's bankruptcy actually belongs to Leslie Kelly.
Kelli sent that information to the credit bureau.
Within 30 days, the mistaken information was removed.
Credit mix-ups are called a "typical" error in a study by the
National Law Center.
It calls for big changes in how disputes are handled.
But the Consumer Data Industry Association, which represents the bureaus, has problems with the study.
Here is the email a representative wrote to the Investigators:
"The Federal Reserve Board and the Government Accountability Office have both discounted studies like those you cite by the National Consumer Law Center. Among several problems the GAO cited with the studies, it noted they 'did not use a statistically representative methodology because they examined only the credit files of their employees… and it was not clear if the sampling methodology in the third study was statistically projectable'.
On the other hand, CDIA testified before Congress that of 52 million credit reports requested by consumers over a two-year period, less than two percent of those reports resulted in a consumer dispute in which data was deleted. In another study, Allstate Insurance Company ordered 17 million credit reports and testified that less than one percent of them resulted in consumers disputing information. We think the data highlighted in these two instances attests to the accuracy of data in credit reports.
If you do have any additional questions, please give me a call.
Best Regards,
Norm Magnuson
Vice President of Public Affairs
Consumer Data Industry Association
Washington, DC"
