“A good name is more desirable than great riches; to be esteemed is better than silver or gold.” -Proverbs 22:1
In this modern world, the credit reporting agencies (Equifax, TransUnion and Experian) exert a tremendous amount of control over our good names with respect to our finances. Unfortunately, these giant credit crunching machines make errors, potentially damaging a person’s ability to obtain financing, favorable insurance and loan rates, and even employment.
Federal law called the Fair Credit Reporting Act (FCRA) sets out the duties and responsibilities of the credit bureaus (called credit reporting agencies in the FCRA) in issuing credit reports. The FCRA also sets out the responsibilities of the companies, such as debt collection agencies or creditors (called furnishers), who furnish credit information to the credit reporting agencies.
Importantly, this law explains to consumers how to dispute inaccurate, misleading, or false information. If a consumer follows this procedure, and the consumer reporting agency or the furnisher fails to correct erroneous information, the law provides for damages and correction.
In a nutshell, to correct credit report errors, the consumer is required to follow a specific procedure to dispute inaccurate information. The consumer reporting agency usually has 30 days to verify the disputed information with the furnisher. If the furnisher of the information fails to verify the item, the consumer reporting agency must remove the entry from the credit report. If the information is verified, the credit bureau must advise the consumer in writing that the furnisher has verified the information, and it will continue to be reported. The Federal Trade Commission sets out steps and provides forms for consumers to use to obtain copies of credit reports and dispute errors.
If the consumer reporting agency is unable to verify the information or if the furnisher advises there is an error, the consumer reporting agency is required to delete this information and to advise the consumer in writing that the information is being deleted.
If the consumer reporting agency advises the consumer that the information is verified and will not be deleted, the consumer may request a reinvestigation. Again, there is a specific process for doing this. Both the consumer reporting agency and the furnisher must reinvestigate the dispute. Once the reinvestigation is complete, the credit bureau must notify the consumer that it is deleting the information, or else confirm that they reinvestigated and found the information as accurate.
The consumer reporting agency and the furnisher must consider any documentation furnished by the consumer that challenges the validity of the erroneous information. Often the consumer reporting agency and furnishers fail to conduct more than a cursory investigation, and sometimes conduct no investigation. This can result in potential damages, both actual and punitive, as well as attorney’s fees and costs to both the consumer reporting agency and the furnisher.
Under the FCRA, the consumer reporting agency must follow reasonable procedures to provide accurate credit reports. Failure to do so may result in the consumer reporting agency’s liability for actual and punitive damages where warranted.
If your credit report contains an error that you have been unable to resolve, contact a knowledgeable consumer law attorney for assistance.
You may also find the following articles helpful: