One of my coaching clients called me in a panic recently. He was reviewing his credit report and saw a credit item listed in collections that he didn't recognize. Had his identity been stolen? Was a creditor trying to pull a fast one on him? He wasn't sure what to do. Was his credit report rife with errors?
This scenario is pretty common: You check your credit report and see something you don't recognize. And it's true, not only on credit reports but also on credit card statements and bank statements as well. While it could be an indication of a stolen identity or an error, one of the first things you should check is the name of the company. This happens for a few reasons. Two of the most common reasons are:
1. A creditor (such as a store or financial institution whose company name you are familiar with) has passed your name on to a debt collector (whose company name you are not familiar with).
2. A creditor operates under one name but its legal name (used in payment processing) is something else. For example, your local car dealership might be owned by a numbered corporation that owns several other car dealerships, too. So you think you bought from Jim's Used Autos but your credit report shows 9205875 New York (1995) LLC. We also see this frequently from online purchases where one company sells a product but they use a third-party payment processor to handle the transaction and distribution.
In either of these two cases, the name on your credit report may not be immediately recognizable to you. Don't panic! It doesn't necessarily mean that someone else has stolen your identity. Before you do anything, try these steps:
1. Do some quick research on the web to find out who the company is. Are they a debt collection company? Are they an umbrella corporation for an organization that you have made a purchase with?
2. Contact the company and inquire about the item on your credit report (or credit card statement or bank statement). Ask them for the name of the originating creditor.
3. Get as many details as you can about the transaction (such as where it took place, the date of the purchase, what was purchased, and confirm the amount).
From there, you can then make an informed decision. If it is something you DO recognize then you can deal with it in an informed way -- perhaps by arranging a payment plan, for example. If it is something you DON'T recognize then you can take appropriate action -- perhaps by disputing the incorrect item with the credit reporting agency or looking further into the situation to make sure that it is not an identity theft scenario.
Many credit reports have errors on them but that doesn't necessarily mean that an unrecognizable item on your report is an error. Do some deeper digging to find out exactly why it's there. Remember that the name on your credit report or credit card statement might not be the name of the company you originally bought it from. Don't forget my number one rule is to be aware what is being reported about you on your credit reports. Pull your credit report today!