This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

FTC: 1 in 5 Have Time Bombs in Their Credit Reports

Stocks in this article: EFX

NEW YORK ( TheStreet) -- You may now know it, but you could have an error on your credit report that would result in your paying more for a home, credit card or car.

Says who? Says Uncle Sam, in a report out this week.

According to the U.S. Federal Trade Commission, 5% of Americans have mistakes on at least one of the three major credit reports -- Experian, TransUnion and Equifax (EFX) -- that could cost them more for major purchases.

Furthermore, 20% of U.S. consumers have a mistake on their credit report that may not trigger an immediate decline in their credit scores but could hurt their scores down the road.

Credit scores are the ultimate kitchen table economist issue. Let unattended, those errors could really hit Americans where it hurts -- in the wallet.

"These are eye-opening numbers for American consumers," says Howard Shelanski, director of the FTC's Bureau of Economics. "The results of this first-of-its-kind study make it clear that consumers should check their credit reports regularly. If they don't, they are potentially putting their pocketbooks at risk."

Here's a snapshot of relevant points from the FTC report:

  • 25% of U.S. consumers found errors on their credit reports that could crimp their credit health.
  • 20% of consumers had an error on their credit report that was corrected by the credit agency after the mistake was disputed.
  • 80% of consumers who filed disputes had the mistake "modified" by the credit report agency.
  • 5% of consumers had a maximum score change of more than 25 points, and only one in 250 consumers had a maximum score change of more than 100 points.

"Credit reports play a crucial role in determining consumers' financial discipline and responsibility," says Howard Dvorkin, CPA and founder of Consolidated Credit. "Detecting credit report errors allows consumers to correct inaccurate information that could potentially lead to denied loans and high interest rates."

Dvorkin advises consumers to check their credit report every 90 days -- credit reports are free through annualcreditreport.com, FTC officials note -- and contact the credit bureau right away to fix a mistake. That's especially important before buying a home, car or applying for a credit card or insurance policy.

To tackle low credit scores, he says, consumers should call creditors and negotiate a lower interest rate. Somewhat surprisingly, creditors are receptive to a lower rate if they think it will help them collect their debt more quickly.

Consolidating credit card debt is another good way to bump up your credit score, Dvorkin adds. That makes it easier to pay down debt and increase the average age of revolving credit lines, which can help the credit utilization ratio.

Managing your credit health doesn't have to be a full-time job.

Only an hour or two per month can mean the difference between a good credit score, and lower interest rates on big purchases, and a lower score that could add more to your debt burden.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs