You’ve no doubt heard the advice many times: “Check your credit reports at least once a year to make sure they are accurate.” It’s good, solid advice worth heeding. But what happens when your credit information gets mixed up with someone else’s – and you can’t seem to separate it? Or worse yet, if you check your credit reports and find no problems, but still get turned down for credit due to negative information?

The phenomenon is called “mixed files,” and it can be very difficult to straighten out.

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To learn more, I spoke with Jill Riepenhoff, a reporter for the Columbus Dispatch. Along with her colleague Mike Wagner, she recently conducted an in-depth investigation into credit report complaints. Following is an edited excerpt from my interview with Riepenhoff on Talk Credit Radio:

Who’s Complaining?

This project had really organic beginnings for us though. A colleague of ours in the newsroom has had a long-time problem since 1994 trying to correct her credit report. She has been mixed with somebody who has a similar name and it’s just year after year of frustration. When I heard this, I thought, “That is crazy. That doesn’t happen.”

The first thing that I did was go to the Ohio Attorney General’s consumer website and I just put in the search terms of the big three credit reporting agencies. Immediately, I saw hundreds of complaints, and I thought there’s probably something here. So that was really how this began, it was just a personal story from someone in our newsroom, and wondering whether it was an isolated case.

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We sent public record requests to the Attorney General of all 50 states and then we also did a Freedom of Information Act request at the Federal Trade Commission which was the full regulator of the credit reporting agencies until last July when the new Consumer Financial Protection Bureau took over.

From the AGs, we were able to get complaints from about half the states. The others either wanted to charge us too much money or they weren’t public records. A couple of states just completely ignored us.

Ignored and Frustrated

The number one theme that jumped out right off the bat was that these consumers, by the time that they were contacting the AG’s office or the FTC, their concern was long ignored by the credit reporting agencies. Whatever the issue was, they could not get it corrected nor could they get anyone on the telephone at the credit reporting agency to help them.

I must say that these complaints (at least the ones from the FTC) were unverified. We don’t know what happened. We can’t say with 100% certainty that this was a legitimate complaint. But when you read the narratives of these, you just knew that there was something in there. Elderly people that were complaining because they didn’t know how to use a computer, they wanted to get their credit reports, they couldn’t get anybody on the phone to help them navigate the system. That’s a credible narrative in my mind.

Mixed and Mismatched

(To understand how this happens), I kind of picture it a little bit like a library. It’s not like there is a report that they picked out of the file cabinets that says “Jill Riepenhoff.” What they do, is when a creditor orders a report it kind of searches through all the library shelves and looks in all the books and finds all the ones that look like they belong to Jill Riepenhoff.

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Well when I order my credit report, they’re pulling the books, if you will, that have my exact name, my exact address, my exact Social Security number, my exact date of birth, and typically they ask something about my account information: what’s your mortgage payments or who’s your car loan with or something like that. So, when the computer goes to pull the books off the shelf, they’re only finding those accounts that exactly match the needed information.

When creditors do that, they have much looser standards. They don’t have to ask for all that information, they can pull off the shelf based on a partial Social Security number or a partial name. So, like, we found situations where it was close enough. Myra could easily include information from somebody named Maria, for example. So the computers go in and pull all those books that look kind of close enough. Then, boom! You have a mixed report because you have Maria and Myra on the same report now. But that consumer won’t see that because it’s only going to pull the things that exactly match.

Your Worst Nightmare

One of the stories that we highlight in the series is the woman who went to buy a car in Colorado. And the week before she went to buy the car, she checked her credit report to make sure everything was in order. It was fine, she had a wonderful credit score. She even paid for the score to make sure that everything was above board.

She goes into the dealership. She even goes on her lunch break, thinking this is going to take that little amount of time. The next thing she knows, she’s practically in custody in the car dealership because when the car dealership ran her credit report, the matching formula used said was on a terrorist watch list from the federal government.

It took her about six years (to straighten it out) and she had to file a lawsuit in order to make the damage go away. On her own, she could not convince the credit reporting agency that she was not the international drug trafficker who the alert was up against.

Learn More

To listen to the full interview with Riepenhoff: Download the interview here; play the interview online here; or get the podcast on iTunes.

Learn how to correct mistakes on your credit report here.

Image: Omad, via Flickr

You probably have it in your head that your credit report is “good” or “bad.” But with credit reports, beauty is in the eye of the beholder. The credit report itself is just a compilation of facts about your financial habits and it is, in fact, judgment-free.

It’s up to lenders, insurance companies or others that review your credit reports to evaluate that information, and they usually do that with the help of credit scores. Of course the information used to calculate your credit score is found in your credit report. So you don’t really want to see one without the other! (It just so happens you can do all of this—get an overview and explanation of your credit report and see your credit scores—using Credit.com’s Credit Report Card. It’s free.)

There’s a popular misconception that your credit report is a computer file sitting at a credit reporting agency being periodically updated. But it doesn’t quite work that way.  When someone requests your report, the credit reporting agency’s computers go to work, compiling information that matches your identifying information into a report that can be scored or provided to the lender, insurance agency or other company that purchased it.

[Related Article: What's a Credit Score? Really.]

Experian has described it this way: You may have all the ingredients you need in your kitchen to make a particular dish, but until you put those ingredients together, the dish doesn’t exist.

There are three main companies that compile and sell credit reports nationwide: Equifax, Experian and TransUnion. They don’t share information with each other, and the data each one collects and reports may be different as a result. That’s why it’s a good idea to review your reports with each of these agencies. You can get them once a year at AnnualCreditReport.com and you may be entitled to extra free copies under federal law. (Our Credit Report Card and the accompanying scores are based on your credit report data and essentially translates the information in the raw credit file into something more user friendly.) And if you’re planning on trying to build better credit, you might consider subscribing to a credit monitoring service that provides additional features.

What’s In Your Credit Report?

There are four main categories of information in your credit report: personal information, account information, public record information and inquiries.

Personal information includes the items used to help identify accounts that are yours when your report is compiled:

• Your current and former names (if you’ve married or divorced and changed your name, for example)
• Your Social Security number
• Current and former addresses and variations
• Employment information

What to look for here: Don’t be surprised if you see out-of-date employment information. Lenders don’t usually rely on that data. But do investigate if you see addresses that are clearly wrong – in another state, for example – or variations of your name you don’t recognize. They could mean your credit information is getting mixed up with that of someone else, or they could be a sign of identity theft.

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Account information (a.k.a. “tradelines”): This is the meat of your credit report and usually is the most detailed and longest section of your credit report. It may include:

• Credit cards, department store cards, gas company cards
• Vehicle loans or leases; RV and boat loans
• Mortgages and home equity loans
• Consumer finance company accounts
• Credit union credit cards or loans

Each individual account will list details such as:

• Lender name and account number
• Date the account was opened and closed (if applicable)
• Original and current balance
• Monthly payment amount
• Payment history
• Current status (paid as agreed, 30 days late, etc.)

What to look for here: Remember when we said that credit reports are compiled when requested? That means that your credit report includes the latest information reported by your lenders. If your lender hasn’t reported that you paid your balance off yet, for example, the last balance reported will show up here. It may take up to 30 days for your current balance to be reported. (And by then, it may have changed again!)

Also remember that some accounts, like medical bills, are only likely to show up on your credit reports if they have been turned over to collections. And since reporting accounts is voluntary, you may not see all of your loans on your report.

Public Record Information includes items that are part of the public record, which means they have been recorded with a court. This section can also contain collection accounts, even though those are not part of the public record. What you’ll find here:

• Civil judgments (criminal information is not reported on standard consumer reports)
• Bankruptcies
• Federal, state and county property and tax liens
• Collection accounts

What to look for here: Make sure dates and balances are reported correctly. Dates are especially important because they determine when these items will come off your credit reports. And while paying a collection account may be the right thing to do, and may help you avoid being sued for a debt, it won’t likely boost your credit scores.

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Inquiries note when someone has obtained your credit information. There is nothing that indicates whether you were approved or rejected for credit at that time. Some inquiries can affect your credit scores, but not all do. Soft inquiries usually aren’t seen by anyone else but you, and they usually won’t affect your credit scores. These include:

• Consumer inquiries, which indicate that you’ve requested your own credit information.
• Promotional inquiries, usually for prescreened credit cards. Tip: You can remove your name from these marketing lists by calling 1-888-5OPT-OUT.
• Account review inquiries created when your current lenders request your credit information.
• Employment or insurance-related inquiries

Mortgage, auto and student loan inquiries within a recent time period (usually 30 or 45 days, depending on which scoring model is used) are ignored. And going back in time, inquiries of these types that occur in a short period of time are usually grouped together.

What to look for here: Look into inquiries from companies whose names you don’t recognize. While it’s possible that they could be from companies you’ve done business with (if they report under a different company name), they could also indicate fraud.

Next Steps

Once you’ve reviewed your credit report carefully, your next steps will be to:

1. Dispute mistakes and
2. Get your credit score to understand how lenders may view the information in your reports.

Image: seniorliving.org, via Flickr

It’s not Freaky Friday, but many consumers are finding their financial lives swapped by accident—and it’s having big consequences.

A four-part series from the Columbus Dispatch called “Credit Scars” kicked off this week, examining the damage done when credit reporting agencies blend two credit reports together. The year-long investigation by the paper uncovered thousands of examples of credit reports being blended together. A few examples include a woman whose credit report was mixed with her daughter’s and another woman with a common name who actually had her credit report blended with multiple women by the same name.

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So, who is likely to fall victim to credit report errors and how do multiple consumers’ credit reports get blended together?

The Dispatch examined the records of almost 1,300 individuals who complained to the FTC over the course of 2 and 1/2 years that their credit report had errors because it had been blended with another report. The findings showed that family members are far and away the most likely to have their credit files mixed. Second to direct family members are strangers, followed closely by strangers with the same name and then strangers with a similar name.

Interestingly, consumers also reported having their credit files mixed with their patients, roommates and neighbors, although the number of incidents for these complaints are very small.

The easiest way to make sure your credit report hasn’t been blended with another consumer’s file is to check your credit report regularly. Credit experts recommend checking your report once every six to 12 months.

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Image: DrBacchus, via Flickr

Credit.com and the free Credit Report Card were featured last night on Channel 2 KTVU's special report by Pam Cook.  The report discussed why preserving good credit scores is key to surviving in a troubled economy.



Adam Levin, Chairman and Co-Founder of Credit.com, was interviewed for the piece and explains how your credit card balances are one of the keys to obtaining high credit scores. What is your credit score, how is it calculated and what does it mean? If you missed it, you can watch the full clip here: http://www.ktvu.com/video/23512512/index.html

Special thanks to Erin Smith, a local consumer in the San Francisco area who shared her personal credit story.  The fact that she used our free Credit Report Card before she went to apply for an auto loan makes everything we do at Credit.com worthwhile. Credit.com, promoting financial literacy and consumer credit awareness, one consumer at a time. 

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