If you review your credit report and notice an unfamiliar item — or you receive an alert about an account from your credit monitoring service but don’t recognize it — start by contacting the lender or creditor. There is a chance that the listing is totally legitimate.
According to the Consumer Financial Protection Bureau, the item may be a third-party collection company a creditor has sold an account to, or it may simply be an inquiry resulting from a prescreened offer of credit. Contacting the creditor is the best way to get to the bottom of this.
However, it’s also possible that the creditor or credit bureau has made an error or, worse, that a criminal has opened a fraudulent account in your name.
Below, we’ll explore the impact an unfamiliar account can have on your credit score and the steps to take any time you notice potentially incorrect information on your credit report.
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How Errors Can Hurt Your Credit Score
If your credit report contains errors indicating missed or late payments, your credit score could suffer. The largest factor affecting your credit score, for instance, is payment history; it accounts for 35% of your FICO Score. That means even one or two errors regarding a missed or late payment could drag your score down.
A fraudster who opens a credit account in your name and racks up debt can do far worse damage. For starters, they’ll reduce your average age of credit by opening a new account, and if they max out that account, they’ll increase your credit utilization. Finally, a fraudster will not pay off the bills they’ve racked up in your name, meaning your credit report could soon show thousands upon thousands of dollars in missed payments.
Recommended: 10 Strategies for Building Credit Over Time
How to Dispute Items on Your Credit Report
To dispute an item on your credit report, you’ll need to contact the company who has reported the error and the credit bureau itself. Check your credit report from all three major credit bureaus, as you may need to correct the issue with more than one bureau.
You’ll likely need to start by filling out a dispute form and submitting it to the credit bureau(s) reporting the error. You’ll want to detail why the item on your report is incorrect. You should also include any paperwork that supports your claim. You can dispute errors online or over the phone:
• Equifax: 866-349-5191
• Experian: 888-397-3742
• Transunion: 800-916-8800
If you’re submitting by mail, pay for a return receipt so you know when the credit bureau has received your dispute. Use the address that appears on your credit report, or visit the credit bureau’s website to determine where to send the dispute.
Credit bureaus have 30 days to investigate your dispute. You should expect further contact from the bureau(s) regarding the status of your dispute and any next steps.
In addition to disputing with the credit bureau(s), you’ll also need to contact the creditor directly. Depending on the creditor, you may do this by mail, online, or over the phone.
Note that it’s possible for your credit score to drop after a dispute, rather than improve. For instance, your credit limit may be lower than what was previously reported, which could lead to a decrease in your credit score.
How to Escalate Matters
If you suspect fraudulent credit card transactions or other unauthorized credit accounts rather than a simple mistake, you’ll also need to report the fraud to the Federal Trade Commission (FTC). Here’s how to report identity theft if you notice fraudulent activity on your credit report.
Steps to Take for an Unfamiliar Creditor on Your Report
Notice an unfamiliar creditor on your report? Here are the steps to take:
• Do some quick research: Whether you use a money tracker app or a DIY method, go through your own past transactions and notices from your creditors to determine if the entry on your credit report is correct — and you’ve just forgotten about it.
• Contact the credit bureaus: If you’re certain the unfamiliar creditor is there by mistake (or due to fraud), you need to contact the credit bureaus to file a dispute.
• Freeze your credit reports: This is an important step so third-party lenders cannot review your credit report while it’s inaccurate. It’s also a good practice if you’re the victim of fraud.
• Contact the creditor who reported the error: You’ll also need to dispute the error with the company that initially reported it to the creditor.
• Escalate to the FTC: If the mistake is simply a data entry error, you don’t need to take any further steps. But if the issue on your credit report is the result of some type of fraud, you’ll need to report it to the FTC.
Recommended: How Long Does It Take to Build Credit?
How to Prevent Errors and Fraudulent Activity
Disputing errors on your credit report is essential as soon as you notice them, but you can also take proactive steps to prevent errors and fraudulent activity altogether.
Credit Report Freezes
Freezing your credit reports prevents fraudsters from opening new credit accounts in your name. You’ll just need to temporarily unfreeze your credit reports whenever you’re applying for credit, whether that’s a new credit card or a mortgage.
Protect Your Financial Info
Your personal information, including your name, address, email, phone number, bank account number and routing number, and Social Security number, can be dangerous if they fall into the wrong hands. Always use secure passwords online, and never share your personal information unless you’re certain you’re speaking to a legitimate person and not a scammer.
It’s also a good idea to familiarize yourself with common online bank scams and ways to avoid them.
Credit Card Monitoring
Monitor your credit card activity closely. Real-time transaction alerts are a great way to spot credit card fraud the moment it happens. If you receive a notification for a transaction you did not authorize, you can often launch your bank’s mobile app to freeze the card and then contact your bank to discuss the charge.
Enroll in Identity Monitoring Services
In addition to credit score monitoring services, which allow you to check your credit score regularly, consider enrolling in identity monitoring services. These provide a larger array of protections, alerting you when other important information, such as your Social Security number, gets compromised. Identity theft protection services even include insurance to help cover costs associated with identity theft.
💡Quick Tip: Online tools make tracking your spending a breeze: You can easily set up budgets, then get instant updates on your progress, spot upcoming bills, analyze your spending habits, and more.
The Takeaway
If you notice an error or unfamiliar account on your credit report, it’s important to take action fast. Dispute the error with the credit bureau as well as the company that reported the incorrect item. If you suspect fraud, you should also contact the FTC. In the meantime, consider enlisting the help of a credit monitoring service to help you stay on top of your credit score and credit report.
Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.
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FAQ
What if I don’t recognize something on my credit report?
If you don’t recognize something on your credit report, it’s possible a creditor has simply prescreened you for credit approval. But it’s also possible that there’s an error on your report or, worse, that you’re the victim of fraud. Contact both the credit bureau and the creditor to dispute the error, and follow up with the FTC if you suspect fraud.
How do I dispute an unknown account on my credit report?
To dispute an unknown account on your credit report, file a dispute (via mail, online, or over the phone) with the credit bureau issuing the report. You’ll also need to contact the creditor that has made the erroneous report. If you confirm that the entry on your report is the result of fraud, consider freezing your credit reports and contacting the FTC.
What if my account is not on my credit report?
If you have a credit account that does not appear on your credit report, it’s possible the creditor does not report to the credit bureaus. Reach out to the creditor where you hold the account to understand which, if any, credit bureaus they report to.
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