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How to protect yourself from false information on your credit report

You'd be surprised how many people have false information on their credit reports and don't even know it. Of course, they find out pretty quickly when they try to get a car loan, home mortgage or credit card and are turned down.

Why does this happen? How can you prevent it from happening to you? And if your credit report has been tarnished by wrong information, how can you clear it?

Why credit report errors happen

Here are a few of the many reasons errors happen:

  1. Credit reporting agencies use computers. Credit reporting agencies rely on technology to compile information and, as we know, technology doesn't always get it right. It's not unusual for someone to find her sister's debts on her report, or for one economical Bob Smith to find the remnants of a spend-thrift Bob Smith's bad habits on his report.
  2. Debts aren't always erased when paid. Nothing's more frustrating than finally paying off a big debt only to find out it's still on your credit report. This goes back to the point above: In a system where computers do a lot of the work, significant errors can - and do - happen.
  3. Identity theft is becoming a larger problem. If someone steals your identity, you will likely have false information on your credit report. In addition to using your current credit card, criminals may open new credit accounts in your name, all of which will show up on your report.

Four steps to protect yourself from credit errors

More than one third of Americans have never looked at their credit report. Many more don't take the time to check their reports regularly. Here's what you should do to ensure the information on your credit report remains accurate:

  1. Get your free annual credit report. Under federal law, you are entitled to at least one free copy of your report every year. Click here to get your free report.
  2. Protect yourself from identity theft. Check your bank and credit card statements regularly. If you see any activity that is unfamiliar, report it immediately. Change your passwords monthly, use a credit (not debit) card to make purchases online, only buy from secured websites and keep your eye out for scams (like fishing).
  3. If you notice an error, dispute it directly with the company. The sooner you contact the credit reporting agency or furnisher, the less of an impact it will have on your life.
  4. Contact an attorney. An attorney can help you take legal action to remove the wrong information and may even get the credit reporting agency to pay you compensation for your troubles and cover your attorney's fees.

Do you have wrong information on your credit report? Don't wait until it is too late to find out. Get your free credit report. Then, learn more by visiting our credit report FAQ page.

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