Lindsey Hough

From Lindsey Hough, managing editor, Palm Beach Wealth Club: Bryan’s credit score dropped 54 points overnight. And like most people, he never would have known it…

Another Bryan—with the same last name—forgot to pay his $209 cellphone bill. It went to collections… then ended up on our Bryan’s report.

Look what it did to his score:

Score

Bryan only noticed this “ding” because he uses the paid services from myFICO. One day, the service alerted him to the change.

[The website myFICO is the only place consumers can purchase their official FICO credit scores from the “Big Three” credit reporting agencies. There’s no way to get your official scores for free.]

  A few dings on your credit score could cost you tens, if not hundreds, of dollars each month in unnecessary interest payments.

Bryan’s drop meant the difference between paying 3.3% or 6.7% interest on a new car loan.

Over five years, instead of paying $1,697 in interest… he will have paid $3,577.

It works out to an extra $31 tacked on to the car payment each month… for the exact same car.

Now, this isn’t a case of identity theft. Nobody stole Bryan’s name or bank account. But these mistaken identity reporting errors are just as damaging…

A recent Federal Trade Commission (FTC) study shows one in four consumers—52 million Americans—have errors on one of their three major credit reports.

Ninety percent of lenders use these FICO scores to make judgments about people every day: how much you’ll pay in interest for a car, business, or auto loan… whether you’ll receive approval for an additional line of credit… if an apartment complex will extend you a lease. Someone else’s mistakes may be penalizing your financial life.

  But, there are solutions. You can take advantage of a little-known loophole in the Fair Credit Reporting Act (FCRA). It’s known as Code 1681.

This loophole requires the reporting agencies to investigate and remove any disputed, negative item from your credit report—if it cannot verify the item within 30 days.

Here are the contact points for each of the three major bureaus: Experian, Equifax, and TransUnion.

Beyond this, sign up for free credit monitoring with Credit Karma. Credit Karma won’t provide your actual FICO scores… but it will provide similar numbers called Vantage scores. These will give you a good idea of what your actual FICO scores will look like. The service also monitors your credit reports and alerts you when any changes occur… tipping you off to potential problems in real time.

This is one of many ways you can reduce debt and increase your credit score. We cover them all inside the Palm Beach Wealth Club’s new “Debt & Credit Solutions” series.