If years ago you never bothered to read your annual credit report, these days it's the one most important document that people repeatedly review. The financial crash in the US has resulted in creditors tightening their policies and raising the minimum credit score they'll give credit to.
Dylan had a credit score of 672. Recently, one of the banks he has a credit card with cut his credit limit, resulting in his score plummeting to 615. It wasn't due to anything Dylan did; it's part of a plan of several banks to cut credit limits across the board.
On reviewing his free annual credit report, Brent noticed an inquiry from someone he didn't know. It had been made by a lawyer's office, and was done three times by the same office - two times for permissible purpose, and once for collection purposes. Although Brent had claimed bankruptcy back in 2000, that bankruptcy has since been discharged, he has made all his payments on time, and has no debts.
Brent couldn't find any reason for such an inquiry on his credit report. Upon calling the lawyer's office, Brent found out that the office had made the inquiries in relation to some old hospital accounts dating back to 1999. The hospital, and the accounts, have been closed for years so there was no reason for the inquiry. A letter sent to the lawyer's office got a reply acknowledging their mistake, and the promise that they would ask Experian to request the removal of that inquiry.
What you don't know could hurt you. Had Dylan not checked his free annual credit report, he would never have known of the credit score drop, and if he needs credit in the future his application would be denied. Brent's experience is an example of an unauthorized inquiry by someone who has no business checking his credit report.
A credit report with too many inquiries is not a pretty picture for creditors because it indicates that a person could be in financial trouble by being late on payments or is desperately needing credit. You need to check your report very carefully for information that shouldn't be there or could have a negative effect.
For both Dylan and Brent, the story shouldn't stop there. They need to take further action to repair the damage on their report. Although cutting up the credit card and using cash instead is a temptation, Dylan should continue using his card, paying on time, and working to raise his credit score to beyond 672. Cancelling the card will only result in a further drop in his credit score. Brent should write a letter of dispute to all three credit reporting agencies - not just Experian - and continue monitoring his reports to make sure that the inquiry from the lawyer's office is removed from all three reports.
Stories like these emphasize the fact that you need to get your credit report and check them for un-updated or erroneous information. Find out more about how to get your annual credit report for free on our website, and learn how to keep your credit report and score in tiptop shape. Our useful advice on resurrecting your credit will be a big help as creditors tighten policies.
Jeremy Englewood is a credit manager and writer with over fifteen years' experience in the banking industry. His sensible and practical advice on personal finance topics have provided inspiration to people who want to establish or repair their credit. You can read more of his articles on credit repair at HowtoEstablishGoodCredit.com.
