80 percent of credit reports contain an error

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Updated: August 4, 2011 4:20PM

Credit reports are not infallable, according to Matt Nolan, director of financial education at CreditWise in West Des Moines, Iowa. Nolan has worked in the financial industry for 16 years.

1. It could contain errors.

The three main credit reporting agencies, TransUnion, Equifax and Experian, report the information they receive from banks, lending institutions and collection agencies. “With this huge exchange of information, mistakes happen at an alarming rate,” Nolan says. “Some studies show that up to 80 percent of all credit reports have some type of error.”

2. Credit reports are for more than loans.

“Your credit report is not only being used by lenders to verify your creditworthiness, it is also being used to calculate insurance rates, screen job applicants, approve cell phone contracts and apartment rentals and more,” Nolan says. While this practice has been debated and challenged, it’s widely used to categorize people as worthy candidates for a variety of opportunities.

3. Reading reports helps detect identity theft. Reviewing your credit report often helps ensure no one is using your personal information to obtain credit. According to the Federal Trade Commission, as many as 9 million Americans fall victim to identity theft each year.

4. Retirement depends on it.

A lifetime of marginal to poor credit costs individuals thousands of dollars in additional interest charges — charges that could have been saved and invested for retirement funds. “Most of us need credit to purchase our homes, cars and educations, but too few people have a healthy respect for the effects that the overuse or abuse of credit can have on our long-term goals,” Nolan says.

5. You’re allowed one free report each year. Obtain a free copy of your credit report annually from each of the three credit reporting agencies at AnnualCreditReport.com. Gannett News Service