Why should I check my credit history?
by Tim St Vincent
Hopefully you read part I of “Why should I check my credit history.” If not, I strongly suggest that you pull it up on the Pilipino Express web site and give it a quick read.
I left off part I promising to share some stories with you of mistakes with the credit bureaus and their impacts. Recall that there are two credit bureaus. They are both private, for profit, competitive, non-government companies. So let’s start off by discussing an error I recently spotted with my own credit history.
As recommended, I check my credit history with both of the credit bureaus once a year. I did this about four months ago. One of them came back fine, no issues. The other came back with four errors on it. This example shows the importance of checking with both the bureaus. If I had stopped with just the first one, I would never have been aware of the error with the other!
A financial institution I use had incorrectly reported that I had applied for credit three times within one month, and that I had missed a mortgage payment! All of this was totally incorrect, but it caused my score to drop 148 points. My wife’s credit score was similarly impacted, as she was a joint signatory on the mortgage. Note, if there is an error and it relates to a jointly held account, it is very important that the error is addressed for all of the holders of the joint account as they will all be similarly impacted!
Once I had confirmed the source of the error I contacted them. (Note, always start with the source of the error; this is the easiest way to correct it. If the source of the error disputes the error, or won’t work with you, then contact the credit bureaus.) After a few phone calls they agreed that there was an error on their end and they would correct it. It took about two months and then they advised me that all was well.
Important: once you are advised that the error has been corrected, confirm that your credit score has recovered. If not, you will need to continue to work with the source of the error and/or the credit bureaus until your score has returned to its correct value.
Keep in mind, as mentioned in Part I, if I were to apply for my current job with the Credit Counselling Society, with the incorrect credit score I would not have this job. My score would have been too low. Not enough people recognize the link between employability, the credit bureaus, and their credit scores.
I will finish up this article with a second example of a mistake with the credit bureaus, but the bureau itself, not the lender, made this mistake.
I was delivering a workshop on “The Truth About Credit” where I advise people, among other things, on how to check their credit history. One month later I was running another workshop on “Budgeting 101” when a woman from the credit workshop came up to me to share her story.
She was an unemployed surgical nurse who had been looking for work for six months and had been unsuccessful. She would always get called in for the first interview, things would go great, but she would never be contacted for a second interview. After attending the credit workshop she did as I advise and checked her credit history. One was perfect, nothing wrong with it; the one from the second credit bureau had only one thing correct, her name. Everything else was completely wrong. What happened? Someone at one of the bureaus had cross-referenced her file with another woman, with the same name who was also a nurse!
Imagine you are the hiring manager. You call the nurse for an interview. Everything goes great, before calling her back for a second interview you run a credit check on her (as she gave permission in the fine print of the job application). Everything comes back fine from the first bureau. Great! So you run her through the second credit bureau. None of her information, other than her name, matches what she told you about herself! Her address, her birthdate, her most basic information doesn’t match! You can’t take this risk, you don’t know this person – maybe she is trying to steal someone’s identity to get access to hospital records or drugs! You don’t have time to sort this out and you can’t take this risk because this woman would have the lives of patients in her hands! Your solution? You discard her application, don’t contact her again, and move on to the next well-qualified applicant. The woman who applied never hears back from you.
The result? No job because of a clerical error. Once this error was spotted, the nurse contacted the bureau (the source of the error) to have it corrected. Within one month of the correction being completed she found a job.
There is real value in checking your credit history once a year with both credit bureaus. It is free and has no impact on your credit score. To quote Nike, “Just do it.”
Tim St Vincent is a retired CFP and is a Certified Educator in Personal Finance with the Credit Counselling Society, a Non-Profit organization. If you wish to contact Tim for a free workshop or webinar, have a question or would like to submit an article idea please contact Tim at 1-888-527-8999 ext 1330. You can also contact the Credit Counselling Society for further information or assistance at 1-888-527-8999 or visit www.nomoredebts.org or www.mymoneycoach.ca