Credit Reporting Problems and Errors

As you probably know, banks and credit card companies rely on consumer credit reports when deciding whether to issue loans or credit cards. But the practice isn’t limited to financial companies. Employers, landlords and insurance companies are increasingly turning to credit reports when deciding whether to offer jobs, rent apartments or determine how much to charge for insurance.

Having an accurate credit report has never been more important. Unfortunately, our credit reports often contain incorrect or incomplete information. Studies have shown that as many as 80% of consumer credit reports contain errors that are serious enough to deny us access to credit or cost us a job (https://www.cbsnews.com/news/4-in-5-credit-reports-have-errors/). Sometimes it’s the consumer reporting agencies (CRAs) that issue credit reports who are responsible for the mistakes. At other times it’s the banks, credit card companies and businesses (called “furnishers”) who provide the CRAs with inaccurate data.

Fortunately, a federal law – the Fair Credit Reporting Act (FCRA) – requires each of the nationwide CRAs to give us a free copy of our credit report once each year upon request. You can request a copy of your credit report online at www.annualcreditreport.com. The FCRA also provides a procedure for us to dispute errors and requires the CRAs to promptly investigate disputes and to remove or correct inaccurate or incomplete information.

But there’s also bad news. The CRAs often won’t remove or correct information even when it’s shown to be inaccurate. The explanation is simple – we’re not their customers. We don’t give them permission to collect our data and we can’t opt-out or stop them from collecting it.

To make matters worse, the CRAs seemingly go out of their way to make the dispute process harder than it should be. Getting information removed or corrected often requires submitting multiple disputes. And even that doesn’t always work.

WHAT REMEDIES ARE AVAILABLE TO CONSUMERS?

If you cannot get a CRA to remove inaccurate information from your credit report, your only option is to file a lawsuit against the CRA or the furnisher who provided the information.

Consumers who prove negligent violations of the FCRA are entitled to receive any actual money damages they suffer and to be reimbursed for their legal fees. Statutory damages, punitive damages and attorneys’ fees can be awarded to consumers who prove intentional violations.

In addition, conduct that violates the FCRA may also be unfair or deceptive and therefore violate our state consumer protection law. Successful plaintiffs in a consumer protection case may be entitled to double or triple damages for knowing and willful violations, as well as reimbursement for their legal fees.

Here are some common FCRA violations that might entitle you to file a lawsuit and seek money damages:

• You ask a CRA to remove inaccurate or incomplete information on your credit report, but the CRA either
• Doesn’t respond to your dispute within 30 days;
• Won’t remove or correct the inaccurate information;
• Doesn’t conduct a reasonable investigation into your dispute (often the case); or
• Doesn’t have reasonable procedures in place for investigating disputes or ensuring that the data it collects is accurate.
• A CRA agrees to remove or correct inaccurate information in your credit report, but the information is later reinserted (usually because a furnisher continued to report inaccurate information after it was removed or corrected).
• Your credit report contains negative information that should no longer be included; this includes delinquent accounts that are more than 7 years old or bankruptcies that happened more than 10 years ago.
• Your credit report contains multiple listings for the same loan or credit card account (this frequently happens when loans are sold, lenders change loan servicers, or a bank sells it credit card business to another bank).
• Your credit history lists delinquent accounts that you never had (usually the result of“mis-merged files” and more frequent for consumers who have common names).
• Your credit report contains inaccurate public record information relating to foreclosures, bankruptcies, tax liens and court judgments.
• Your credit report lists crimes that you did not commit or that were never proven.
• A business or third person obtains your credit report without your consent or under false pretenses (this could happen if you apply for a job or try to rent an apartment and your prospective employer or landlord pulls your credit report without your prior consent).
• You are turned down for a job, an apartment or insurance based on your credit history (called an “adverse action”), but the employer, landlord or insurer doesn’t provide you with certain notices required by the FCRA.
• Someone legitimately obtains your credit report, but uses it for unlawful or impermissible purposes, including for marketing or advertising.

If you’ve experienced these or any other problems involving your credit or credit report, please contact me. But it’s important to act quickly if your rights under the FCRA were violated. Generally, you must file a lawsuit within 2 years of the time you discover the violation.