The credit bureaus get a bad rap, and often deservedly so. After all, when the credit bureaus make mistakes on credit reports the consequences can be quite serious. These serious consequences are not experienced by the credit bureaus themselves, of course. Instead it is you, the consumer, who pays the price for credit reporting inaccuracies.
Wonder how often credit reporting mistake actually occur? The Federal Trade Commission released a study a few years ago which estimated there to be over 40 million mistakes present on the credit reports of US consumers. Other studies have estimated the number of credit reporting errors to be much higher. Mistakes on credit reports can lead to many problems for the affected consumers such as lower credit scores, difficulty qualifying for loans, higher insurance rates, and even problems landing a job.
Yet many of the credit reporting mistakes which occur do not originate with the credit bureaus themselves. That is not to say the credit bureaus are not culpable. It is the bureaus, after all, who actually place the incorrect information on credit reports. Still, a large percentage of credit reporting errors occur because the credit bureaus accept bad information from a data furnisher (aka a creditor, collection agency, or other company who supplies data to the credit bureaus).
Why Mixed Credit Files Are Different
Although many of the mistakes appearing on credit reports originate with bad information submitted by a data furnisher, mixed credit files are different. Mixed files occur because of mistakes made by the credit bureaus themselves. Due to the nature of this mistake, mixed files are one of the most difficult types of credit reporting errors to see corrected.
What Is a Mixed Credit File?
Thankfully for most consumers mixed credit files are not incredibly common, though the people that experience this credit reporting nightmare often suffer greatly. The problem occurs when a credit bureau confuses you with another consumer. This confusion can result in your credit information and someone else’s credit information being merged or mixed into a single file. When your credit file is mixed together with someone else’s file your credit reports can become littered with dozens of accounts and other information which does not belong to you.
Mixed files are often the result of similar names, addresses, or perhaps other personal information. For example, fathers and sons who share a name (senior and junior) are common victims of mixed files. Siblings sometimes find their credit files mixed together due to a shared last name and perhaps a shared former address. Occasionally mixed files happen to people with very common names as well (i.e. Tim Jones or Amy Brown).
What Happens When Your Credit File Is Mixed?
Mixed credit files can make it hard for you to qualify for new financing. If your credit file is mixed with a consumer who has poor credit management history the results can be catastrophic. Your once fantastic credit scores can plummet quickly once the bad credit history belonging to someone else is mistakenly added to your credit reports.
Mixed files can still make it difficult to qualify for a loan even in circumstances where the other consumer has good credit as well. If a significant amount of debt is incorrectly added to your credit report, even if that debt is paid on time and managed well, your debt-to-income (DTI) ratio could increase. As a result a lender may not believe that you can afford new, additional debt.
Correcting the Problem
The Fair Credit Reporting Act (FCRA) gives you the right to dispute any information on your credit reports which you question or believe to be incorrect. You can initiate disputes on your own or, as many consumers prefer, you can hire a reputable credit repair professional to do the work for you. Since correcting mixed files often proves to be difficult, it can pay off to have a pro working on your behalf.
Additionally, permanently correcting a mixed file is generally not a matter of a simple dispute. Even if incorrect information is removed, if the credit files remain mixed together then the offending accounts could potentially reappear on your credit reports again in the future.
Correcting the mixed file issue permanently involves getting through to a credit bureau employee who will actually suppress the incorrect accounts, thus preventing them from ever reappearing on your credit reports again in the future. Of course, connecting with someone at a credit bureau who is willing and able to properly assist you is often very difficult, especially if you have no one assisting you with the process.