Business Loans

Should You Check Your Credit Report for Errors?

Jun 18, 2014 • 2 min read
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      Only if you are looking for a small business loan.

      As a borrower, there are three questions every lender wants the right answer to: 1) Can the borrower repay the loan? 2) Will the borrower repay the loan? 3) What will the borrower do if things don’t go as planned and they struggle to make the payments?

      This is the reason most lenders want to know about revenue and time in business. They want to know if the business owner has the ability to make timely payments. This is also the reason they want to know your credit score. There is some debate as to whether or not your credit score should be the end-all-be-all metric to determine creditworthiness, but it’s a prime metric lenders use to evaluate whether or not a borrower will make regular and timely loan payments.

      With that in mind, it’s very important that small business owners know their credit score and more importantly, know that it’s accurate.

      Over the last almost 40 years I’ve been paying attention to my credit score, I have to admit I can’t think of a time when I recognized a mistake. The good, the bad, and the ugly was legit. Nevertheless, American Banker reported today that Experian (one of the three major credit reporting bureaus) was being sued by the Mississippi Attorney General, “…alleging errors in the company’s data and regular violations of consumer protection laws.”

      The lawsuit, filed in Biloxi, Mississippi, was transferred to federal court late last week.

      This is the first major lawsuit against a credit reporting agency and isn’t the first time the credit reporting agency has been under fire. The Attorney General is arguing that Experian does not provide a “…logical way for consumers to correct erroneous blemishes affecting their credit,” writes Darren Waggoner for American Banker. “When consumers file a dispute, Experian reflexively finds in favor of the bank or debt collector that reported the debt, Mississippi officials said. When consumers call to complain, the lawsuit said Experian employees attempt to sell consumers ‘credit monitoring products of questionable value.'”

      Although I haven’t personally experienced a problem with inaccuracies in my credit report (I am an Experian customer and monitor my credit score on a monthly basis), I think this serves as a reminder that paying attention to your credit score is incredibly important. Unfortunately, should you find errors on your report it sounds like correcting those errors could become problematic with Experian.

      In all fairness, the allegations against Experian are just that—allegations. It will be interesting to watch what happens over the course of the legal wrangling I’m sure will go on between the company and the State of Mississippi. Nevertheless, I think it’s safe to say this lawsuit puts Experian and the other reporting bureaus on notice that people are paying attention and gives small business owners another reason to regularly monitor their credit.

      About the author
      Ty Kiisel

      Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business financing and trends accessible in common sense language devoid of the jargon.

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