A critical part of rehabilitating your credit score is checking your credit report for inaccuracies. According to the Federal Trade Commission (FTC), about 20 percent of all credit reports contain errors, and 5 percent of consumers have errors on their reports that could result in less-favorable loan terms. Errors enter the system through clerical error, incorrect data entry of Social Security numbers or names, incomplete information, inclusion of information about another individual with a similar name, and the application of a payment to the wrong account.
**What to Do**
Request free copies of your credit reports through AnnualCreditReport.com, the website created by Experian, Equifax and TransUnion, the three largest CRAs. If you find errors, contact the offending CRA or CRAs, and request the change. It's essential to correct any errors if you hope to finance the purchase of a new home in the future. You will likely be asked to provide documentation to prove there was a bona fide error and to prove that the new information is a valid correction.