When it comes to purchasing power, one number reigns supreme: your credit score.

Lenders use borrowers’ credit reports and scores to help determine borrowing capacity for big-ticket purchases like an auto loan or mortgage, and if a score isn’t up to par, consumers can face higher interest rates and fees.  

Maintaining a good credit score, which experts say is a FICO around 760 and above, requires consumers to pay bills on time on a regular basis, pay down debt and limit their credit card spending. But even if they are following these steps, some consumers’ scores are taking a hit due to errors.  

A new study from the Federal Trade Commission finds 1 in 5 consumers had an error on at least one of their three major credit reports, and 5% of consumers had errors that could lead to paying more for auto loans and insurance. What’s more, 25% found errors that could impact their credit scores.

The study also found that 1 in 5 consumers had an error that was corrected by a credit reporting agency after it was disputed, and 4 out of 5 consumers who disputed errors had some modification to their credit report, the study says.

More than 1 in 10 saw a change in their actual credit score after the agency modified errors, and nearly one in 20 had a maximum score change of more than 25 points. Only 1 in 250 consumers had a maximum score change of more than 100 points, according to the FTC.  The study encouraged participants to use the Fair Credit Reporting Act (FCRA) process to resolve any potential errors.

The FTC study worked with 1,001 participants who reviewed 2,968 credit reports alongside a study associate to identify and correct possible errors. The study reviews all of the primary groups participating in credit reporting and scoring, which includes consumers, lenders, data furnishers, the Fair Isaac Corporation (which develops FICO credit scores) and the national credit reporting agencies.

Credit.com Director of Consumer Education Gerri Detweiler says consumers often avoid viewing their credit reports because they know it’s not as strong as it should be or they wait until they actually need it for a loan.  

The Consumer Financial Protection Bureau estimates only about 1 in 5 consumers annually obtained copies of their credit reports annually in 2010 and 2011.

“There is a large chunk of consumers who don’t even see their credit reports, so they don’t know if they’re accurate or not,” Detweiler says. “People think if they get the credit card they want, the report doesn’t matter. Or, they know it’s bad and don’t want to deal with the problem. It can also be confusing.”

Those who wait until it’s time to obtain a loan to check their report will find it’s often too late to fix issues, Detweiler says. Checking before you are serious about getting a loan is key to accuracy.

Here are Detweiler’s tips for correcting errors on your credit report:

No. 1: Keep good records of disputes. Any errors you find on your report should be documented in detail. The FTC says inaccuracies often reside in the header information in reports, meaning names are misspelled or addresses are incorrect.

“How you respond to the error will be influenced by how serious it is,” Detweiler says. “For something simple like a misspelling or address, you can click a few links online to dispute.”

If the error is more serious, you need a paper trail of your communication with the lender or credit reporting agency.

No. 2:  Wait 45-to-60 days for errors to correct. It can take several weeks for errors to be fixed, which is why Detweiler stresses reporting mistakes as soon as discovered.

“Depending on your billing cycle, it can take longer to correct,” she says.

No. 3: Contact all three bureaus. Detweiler says the three credit reporting agencies do not share information with one another. Unless you are changing the information with your actual lender, you will have to contact all three credit reporting agencies to update your status.

Follow Kate Rogers on Twitter at @KateRogersNews