Credit Reporting and Your Rights

What is Credit Reporting

For many decades banks, credit card companies and other financial institutions have used the credit reporting system to make credit decisions, such as whether to approve a credit application or what amount of interest to charge. Credit reporting now goes well beyond that. Your credit report will likely be used to decide whether you are allowed to live in a certain apartment complex, obtain affordable homeowners or auto insurance, get hired for the job you’ve applied for, or get that promotion you’ve been working for. The information in your credit report can make a difference in not only the kind of car you drive or the house you live in, but also the job you have.

So how is this information put together and what is your “credit report?”

The companies you deal with - your mortgage company, your credit card companies, your bank, and maybe even your landlord - send information about you and your account to companies commonly referred to as “credit bureaus.” The credit bureaus, officially known as “consumer reporting agencies,” collect and compile this information and put it in a “credit report” which they sell to the companies that request information on you.

Your credit report contains three basic sets of information: (1)your personal information, including your current and former addresses; employment history; part or all of your social security number and your date of birth; (2) “tradelines” containing financial information pertaining to your current or former credit accounts; and (3) a list of companies that have reviewed part or all of your credit file over the last 2 years.

The three major consumer reporting agencies are Equifax, Transunion and Experian. These companies maintain huge computer databases which they use to maintain credit information on millions of consumers.

Errors in credit reports are common
Studies of credit reports reveal a shocking number of mistakes. One of the most commonly cited studies found that 79 % of all credit reports contain some type of error and about 25% of all credit reports contain errors that are serious enough to cause a credit or employment denial.

Some of the most common mistakes include the following:

• Listing accounts owed by other people;
• Listing accounts as “open” which have been long ago paid off;
• Listing an account twice. This double listing can create the false impression that you owe more than you do;
• Wrong personal information, such as addresses and social security numbers. These errors can cause creditors or debt collectors to collect debts against the wrong people;
• Listing accounts that are solely owed by a person’s spouse or ex-spouse.
• Listing current accounts as delinquent or charged off.
• Listing debt as currently owed when it has been discharged in bankruptcy.

The good news is that federal law allows consumers to dispute inaccurate information in their reports. Submitting such a dispute to the credit bureau requires the bureau and the company that furnished the information to perform an investigation and remove any false or incomplete information. Federal law gives you the right to sue any credit bureau or creditor that does not follow these requirements.

Your Right to Dispute Inaccuracies

The main federal law regulating credit reporting is the Fair Credit Reporting Act or FCRA. The FCRA gives every consumer the right to dispute any information in a credit report which is inaccurate or incomplete. For most people experiencing credit reporting problems, this is the most important part of FCRA.

The dispute must be sent to the consumer reporting agency (i.e., the credit bureau) which is reporting the false information. The consumer reporting agency then must conduct an investigation of the dispute and report back to you, usually within 30 days.

The agency must also forward the dispute and all information relevant to the dispute to the company that is supplying the information. That company (called the “furnisher”) must also investigate. After its investigation, the furnisher must respond to the consumer reporting agency by requesting that the disputed information be either (1) verified, (2) deleted, or (3) modified. The FCRA requires that the disputed information be deleted if, upon investigation, either the furnisher or the consumer reporting agency determines that the disputed information is inaccurate or cannot be verified.

A credit reporting dispute is a powerful tool for consumers struggling with inaccurate or fraudulent credit reports. However, there is a specific procedure which must be followed. It is very important to submit a dispute that complies with the FCRA and which provides the information needed to convince the Consumer Reporting Agency and/or the furnisher to delete the false information.

For tips on submitting a Credit Report Dispute, click here.

OTHER CREDIT REPORTING CONSUMER RIGHTS

In addition to the right to a free annual credit report and the right to dispute inaccurate information, federal law gives you other rights regarding your credit report. Some of these include:

Notice of Adverse Action Based on Credit Report

If you are denied credit, insurance or employment, or given some less favorable terms of credit, insurance or employment, because of something in your credit report, you must be provided with written notice of the decision. That notice must give you the name and address of the bureau that generated the report the adverse decision was based on and tell you that you have a right to obtain a free copy of that report.

Right to Obtain Credit Scores

Credit bureaus are required to disclose your credit scores upon your request. The bureaus have the right to charge a fee for the score, but they must give you your score. For more information on credit scoring, click here.

Right to Know Who is Accessing Your File

The credit bureaus are required to disclose to you the names of the companies that have requested to review all or some of your credit file over the last 2 years. This information is included in the credit report you obtain from the bureaus.

Time Limit on Reporting Derogatory Information

Negative credit information may not be reported on your credit file for more than 7 years. A bankruptcy filing may be reported for up to 10 years. There is no time limit on the reporting of information relating to a criminal conviction.

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  "Re-Aging" -- Debt collectors often try to get around the 7-year limit by reporting a debt as having been created at the time the collector acquires the account for collection, rather than the date the account was actually created. This allows the old debt to remain on the report, creating a likelihood that the consumer will pay the collector rather than suffer the adverse impacts on the credit. This practice is illegal. If you see a debt older than 7 years on your report and its being reported by a debt collector with a more recent creation date, contact a consumer rights attorney to discuss your legal options.

Right to Sue for Violations

You have the right to bring suit for damages if certain types of violations occur. The violations which make the violator liable to you include the failure to properly investigate a dispute and failure to remove inaccurate information after a dispute. Often times, bureaus refuse to remove inaccurate information, even after you have provided indisputable proof of the inaccuracy, and bringing a lawsuit is often the only way to have the information removed. In addition to paying you damages, the violator must pay court cost, including your attorney’s fee. This ability to recover attorneys fees allows many cases to be brought with little or no up front fees paid by the consumer.

No Medical Information Reported Without Your Consent

The credit bureaus are prohibited from including any medical information on your report unless you provide your consent, in writing.

Other Information on this Website will explain:

• How to obtain a free credit report
• How to dispute information you believe is incomplete And
• How to get a free legal consultation regarding your credit reporting problems.

This site also explains your credit reporting rights under federal law, including your right to file suit to collect damages from companies that violate those rights.

To find out more about your rights or to contact a consumer lawyer for a free consultation, call 1-877-432-9212 or email Kenneth J. Riemer, Attorney at Law.