WDAM Investigates: Credit scars

HATTIESBURG, MS (WDAM) - Whether it’s a house, a boat, a car, a credit card or even a job, if money is attached, so is your credit score. That number comes from your credit reports, which reflect your financial history. But that history could be wrong.

“You know back in the day, you use to be able to get credit on a handshake. Today, they use your credit score. So your credit score is vital,” said Angela Howze, founder and CEO of the Financial Literacy Institute in Hattiesburg, which focuses on getting folks to understand what’s at stake.

“Systems, technology and people, you can get an error,” said Howze.

A 2012 study from the Federal Trade Commission found 26 percent of consumers had some type of error on at least one of their three major credit reports. While credit bureaus are legally required to correct errors when found, if no one’s looking, they can go unnoticed for years. That same report found those mistakes caused 5 percent of consumers to pay unnecessary higher interest rates.

“It’s sad that these errors are there and hindering people from purchasing their homes or getting a job,” said Howze. “Who wants a 29 percent interest rate on a credit card? Yikes. That’s not something that you would want or even on your house. Who wants to pay a mortgage with 11 percent to 14 percent on a mortgage for 30 years?”

Those mistakes can range from anything like outdated information and misspelled names to duplicate accounts and even fraudulent ones. No matter how small the mistake, Howze said pay attention and act, especially since you can check your credit reports for free.

“There can be an error on your credit report and it can hinder you, but how do you know to fix what’s hindering you if you don’t know what’s on there?” said Howze. “The first line of recourse would be to make sure that it’s yours. If it’s not yours, you say it’s not yours.”

For folks looking to clean up their credit, Howze said just like normal debt, collections play a big role. Digging into state law, Mississippi has a statute of limitations on debt collection.

“It can be any other type of debt that’s in collections," said Howze. “It can only stay on there for three years in the state of Mississippi.”

Howze said that doesn’t mean you don’t owe the money and you should pay. When it comes to protecting yourself from accounts that aren’t yours, a new federal law went into effect last fall, allowing you to freeze your credit for free. That means no accounts can be opened in your name and no one can check your credit, not even you.

“Once you make the request to have the credit frozen, they have to do it within one day. Once you make the request to have it unfrozen it has to be unfrozen in one hour,” said David Smitherman with the Better Business Bureau.

It all starts though with a little due diligence.

“You’ve got to take the initiative and look out for you,” said Howze.

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