- I’ve been aggressively working on paying off debt and building my credit, so I check my free credit score at least once a month.
- During a recent probe, I analysed it more closely than usual and realised there was $US12,000 of debt in my name that wasn’t actually mine – and was able to take it off my report.
- Removing the error increased my credit score by 50 points immediately, and by over 100 points during the next six months.
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About once a month, I check my free credit score at Credit Karma, and am always quite happy when it goes up even two or three points. This has been a regular ritual of mine since the start of the year.
To be honest though, I hadn’t really pored over it as thoroughly I should have. Not until May 28th, that is. That day, after paying off some bills, I had a little extra time and thought I’d give myself a more thorough audit than usual.
Credit Karma gives you estimates of your credit score, plus a list of open accounts and some analysis on how your credit activity affects your score. Looking more closely than usual through my open accounts, I noticed that I had a $US12,000 Discover balance.
This set off alarm bells, since I closed my Discover account over a decade ago.
A phone call knocked $US12,000 off my debt
I immediately clicked the hyperlink to learn more about the account, and quickly scrolled down. I was on my phone, so when I saw a hyperlinked number, I quickly used it to get on a phone call with a Discover employee.
The Discover agent was very helpful and cleared things up for me. Turns out that a family member with good intentions had made me an authorised user on their account, presumably to help me build my credit. In actuality, though, it meant the $US12,000 credit card balance for a card I didn’t use was in my name, as well.
I told the agent to remove me from the account, and once they verified my identity over the phone they did. My report reflected the change the next day.
Over the next 6 months, my score kept rising
Once the $US12,000 account was removed, my debt went from $US55,455 to $US42,661 and my credit score rose from 627 to 677.
Even more excitingly, in exactly six months, my overall credit score went up by 112 points. I can easily say that this is as a result of my credit card debt going down so much. In just two months (from the end of May to mid-July), my credit debt went down again from $US22,902 to $US9,661 ($US12,794 of which was from the erroneous account, the rest from my aggressive efforts to pay off my debt).
Why you should regularly check your credit
It’s easy to get your credit report and credit score confused, so here’s a quick refresher course:
This report from each of the three credit bureaus – Equifax, Experian, and TransUnion – provides details about your credit activity and payment history. The only place to get your credit report for free is AnnualCreditReport.com. The Consumer Financial Protection Bureau suggests checking each of the three major consumer credit reporting bureaus at least once a year, and you can choose to request one of the three every four months to get a running look at your credit.
Beyond your annual checkup, it’s a good idea to check your report if you’re about to take out a loan for a major purchase (such as a new home or car), as well as to lower your risk for identity theft. Even catching one error – such as a late payment, or in my case, an extra $US12,000 that shouldn’t be there – can significantly increase your score and make you more attractive to lenders and creditors. If you do find any errors, you’ll need to report and dispute it with the credit bureaus.
This is a three-digit number calculated from the information in your credit report. It can range from very poor (300-579) to excellent (800-850). Based on your financial standing, lenders can assess how risky you are as a potential borrower.
Sites like Credit Karma provide very close estimates of your score for free, and you can check whenever you want without making a hard inquiry and dinging your score. Plus, Credit Karma gave me enough information about my credit that I didn’t even need to request my credit report – checking my score and reading the details was enough to find and fix a major error.
Whether you’re about to take on a big responsibility like home ownership or getting a new car, or you just want to keep tabs on things and also keep identify theft at bay, it’s a good idea to monitor your credit report. The sooner you spot an error, the sooner you can take action to fix what’s wrong.
Even if you don’t spot any mistakes, that’s some great peace of mind.
- Read more about credit:
- How to increase your credit score, no matter when or where you start
- How to request an increase on your credit limit to improve your credit score
- Your credit score may drop after you finally pay off debt, but it’s only temporary
- How to cancel a credit card you no longer want
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