Ashley Walker didn't know her father's death would kill her credit score.
When Walker's father, Kenneth Lovell, died of lung cancer on Aug. 31, the Social Security Administration accidentally listed her as deceased in its Master Death File.
That fatal mistake affects about 6,000 people a year, according to the Social Security Administration's Office of the Inspector General. And that figure is actually lower than the estimated 12,000 inaccurately reported as dead in 2011, the last time the inspector general did an audit of the data.
"If I'm supposed to be dead, where is my death certificate?" asked Walker, a 28-year-old junior at Chicago State University studying chemistry, who recently accepted a paid summer internship at Harvard University's astrochemistry lab. She hopes to complete a doctorate in the field.
Walker did not discover the mistake until November, when she was rejected for an auto loan to buy a car to get to school, even though she had more than $5,000 for a down payment. She looked at her credit score to find that it was 540. (Many credit scores range from 350 to 850 and the average American has a score of nearly 700.)
"I've never been a big money or material person," Walker said. "I should have been checking my credit report regularly for errors."
What is particularly damaging about a false death report by the Social Security Administration is that all three major credit-reporting companies are contacted and the mistake can take up to three months to correct.
"This is the most painful credit report error because it goes out to everyone," said Nick Clements, co-founder of MagnifyMoney, a financial product comparison website who spent 15 years in the credit card industry.
Once Walker saw her credit score plummet and realized that the three major credit reporting firms — Equifax, Experian and TransUnion — listed her as deceased, she and her mother, Linda, went to their Social Security office.
Though it took a few hours, Walker eventually got a letter verifying she is alive and that she could share with the three credit-reporting companies, her bank, her internet service provider and any other organization that relies on credit reports to make their decisions.
"It is an extremely slow process," Walker said. "I'm still dealing with it, and it has taken months."
The error put Walker's financial aid at Chicago State and her Harvard internship in jeopardy. The Department of Education revoked her student loans for the spring semester, which started Jan. 9. And if she did not attend school this semester, she would not qualify for the Harvard internship.
Fearing that she didn't have enough money to go to school without the aid, Walker raised $8,720 in donations on the crowdfunding website GoFundMe to attend the spring semester. She continues to work out the financial aid details with Chicago State.
If you are in such a situation, it may be tempting to hire a credit repair company. However, the Consumer Financial Protection Bureau issued an alert in September about these businesses.
Avoid any firms that charge an advance fee for their services, which is illegal. If you use a company, make sure you know all the fees you will pay and the limits of any so-called "money-back guarantee."
"With a credit repair company, you are basically paying for services you can easily do yourself," Clements said.
To fix an error on your credit reports, it requires sending a lot of letters. The Federal Trade Commission advises consumers report any errors in writing, and the commission provides a sample letter on its website. Make copies of any supporting documentation that prove the information on the credit report is incorrect.
Keeping tabs on your credit reports and score is a good way to be alerted to any identity fraud.
Several websites, including Credit Karma, Credit Sesame and Quizzle, offer free credit-monitoring services.
The freebies don't give you the most accurate scores from all three credit-scoring firms, and you will be barraged with offers to upgrade to their paid services, but you will receive regular ballpark estimates of where your credit stands and what is affecting your score.
By federal law, you're entitled to a free report from all three companies once a year. While many sites claim to give a free credit report, the official place to go is AnnualCreditReport.com.
"I'm checking my credit score monthly and reviewing my credit reports for errors so this doesn't happen again," Walker said.