Typically, the errors found on a report can be simply corrected, but if not detected, it could cost said individual hundreds, if not, thousands of dollars.
"You can end up rich or poor based on your credit score," is a saying that financial adviser, Troy Sutton shares with his clients.
His philosophy isn't an exaggeration. It's a known fact that the more time passes, the more important a credit rating becomes to the progress of an individual.
"A credit score nowadays is looked at by life insurance companies, health insurance companies and property insurance companies, which means it affects your premiums," says Sutton.
It's become a normal practice for even, employers to take a peek at a prospect's credit score before deciding whether or not to seal the job offer.
"I would say that there is a severe lack of knowledge as a general rule across all ages on what's on their credit score."
According to experts, an individual should check their report at least once a year. The three main bureaus are Equifax, Transunion and Experian. While checking a report, Sutton advises to keep an eye out for simple, but costly, errors.
"Those kind of mistakes are often missed payments that you didn't actually miss, but they were reported as missed," explains Sutton. "Or your social security number or driver's license number was confused with someone else with a similar name, and so you are getting a collection report for a debt that is being collected on that you don't owe."
It's been only a few weeks since Sutton last checked his credit report and found an overdue balance reported by an unfamiliar company. He is now going through the process of getting the error removed from his report.
"It's a very simple process. Write a letter to the credit bureau, and tell them this is not my account." Sutton says, "tell them to remove it from my credit report, and it's done."
Mistakes like this one can be taken care of within 30-days, thanks to the fair credit report act. But if not detected, it could haunt an individual's credit report for at least seven years.
There are a number of other things that can impact a person's credit score. It's important to remember that credit cards are meant to be used, but one should never reach their maximum credit limit. Experts say use between 10% to 30% of your credit limit each month to positively affect your score. Also, control the number of inquiries to your credit report. If a person needs to shop the market for a house, car and loan, it's best that it not be done at the same time. Inquiries should be spaced out over three to six months.