How to clean up errors on your credit record: Roseman
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Scott Smith, 24, is an MBA student. He’s proud of paying his bills on time and having an excellent credit record.
So, he was surprised to find his credit score had plunged when he checked in with the two Canadian credit bureaus. There was a new “derogatory” item from a collection agency acting on behalf of Cogeco, a telecom supplier.
Seems there was an unpaid debt arising from the cable TV box he had rented as an undergraduate and tried to return in 2010. He didn’t know the package hadn’t arrived by mail.
“I’ve now paid the balance in full, but the damage to my otherwise sparkling credit record appears to be done. This blight cannot be removed from my credit history for six years. Cogeco seems unwilling to delete it,” he said.
There is recourse if you’re at an impasse with a credit granter over a debt. You can ask Canada’s two credit bureaus, Equifax and TransUnion, to intercede on your behalf.
When I forwarded Smith’s email to the credit bureaus, TransUnion deleted the Cogeco account within two days and Equifax within two weeks.
He was smart to check his credit record before applying for a loan. With a low score, he could have been turned down by a major bank and forced to go to a lender with a higher interest rate.
The U.S. Federal Trade Commission released a report Monday that found systemic errors in compiling and maintaining credit ratings. The survey of 1,001 participants was ordered by the U.S. Congress.
One in five consumers had an error on least one of their three credit reports, the FTC said — referring to Equifax, TransUnion and Experian (a company that pulled out of Canada a few years ago).
“It’s a pretty high error rate,” FTC chairman Jon Leibowitz told the CBS TV show, 60 Minutes, in a story that aired Sunday night.
The Consumer Data Industry Association, based in Washington, D.C., pointed out that only five per cent of consumers in the FTC survey had an error on their credit report that could force them to pay more for loans.
The credit reporting and dispute process, as 60 Minutes showed, has become dehumanized. People enter their information electronically and often deal with customer service representatives working offshore.
Errors can arise in many ways. People with hard-to-spell names, with names that change after marriage or divorce and with the same name as a parent may have more than one credit report.
Incorrect birth dates can be a problem. Feb. 12 is 02/12 in Canada, but in some countries, it is 12/02. Also, the social insurance number may be off by one digit.
When an overdue account is settled by a client, the collection agency doesn’t always get around to telling the credit bureau about it, says Ross Taylor, a Toronto credit counsellor and mortgage broker.
While doing a routine check on his own credit report, Taylor also found a collection action involving a cable TV box. He had returned the box to a local Rogers store, but that fact never made it into the company’s records.
When asked about the FTC report, spokesman Tom Carroll of Equifax Canada said “expeditiously correcting inaccuracies remains our goal, as we strive for perfection in all instances.
“We have streamlined the consumer dispute process over the past decade to make consumer relations and investigations more efficient and improve our response time to consumers.”
Many people don’t ask the credit bureaus to correct errors. They assume, as Scott Smith did, that there’s nowhere to go after a lender declines a request to clean up their record.
If still not satisfied with a credit bureau investigation, you can ask to add a statement to your account. It might say that a debt arose from a dispute where you felt in the right and refused to pay it.
Advice: Check your report once a year for errors or signs of identity theft. And ask the credit bureaus to correct errors. It’s your right to do so.
Ellen Roseman writes about personal finance and consumer issues. You can reach her at firstname.lastname@example.org . Her new book, Fight Back, is available in bookstores, online and at StarStore.