Most consumers are familiar with a credit report. They know the importance of these reports to their financial lives, the fact that there are three big companies providing credit reports, and that having credit reports matters to their credit scores. But despite this knowledge, consumers are largely unaware of their rights under the Fair Credit Reporting Act (FCRA) in connection with credit reports, the responsibilities credit reporting agencies (CRAs) have to consumers, and what recourse they have if their rights have been violated.
Here is what you as a responsible consumer need to know!
The Role And Importance Of Credit Bureaus
A credit bureau (also known as a credit reporting agency) gathers personal information on consumers and monitors their credit behavior. It collects information from lenders, banks and other financial institutions and produces credit reports for lenders, containing your payment history, any current debts that you owe, credit limits, etc. A credit bureau functions as a middleman between you (the consumer) and your creditors, providing lenders with the information that allows them to make decisions as to whether they should or should not extend credit to you.
Lenders aren’t the only ones who rely on credit reports. The information in your credit report can also be accessed by insurance providers, employers, and landlords to assess your stability and financial responsibility. A poor credit record can hold you back from getting a better loan or a lower insurance premium, and it can even prevent you from getting a job. Your credit report is your financial passport, and can be a deciding factor in almost every aspect of your life.
Your Rights As A Consumer Under The Fair Credit Reporting Act
As a consumer, you have certain rights regarding what information appears in your credit reports and how its accuracy is maintained. All these matters are governed by a federal statute, the Fair Credit Reporting Act (FERA), which applies to every credit bureau in the United States and regulates the entire credit reporting industry. Among other things, FCRA guarantees your right to:
- Free annual credit reports: You have the right to a free copy of your credit report from each of the three major credit-reporting bureaus (Equifax, Experian, and TransUnion) once every 12 months. You can request those reports, see what’s in them, and dispute any errors or inaccuracies (and have a lawyer help you with this!).
- Accurate or complete information: The credit bureaus should make sure that information you dispute is accurate and up to date. They should also remove disputed information from your record.
- Prompt investigation of disputes: If you dispute an error on your credit report, the credit bureaus must investigate the claim within 30 days and either delete or correct any unverifiable or inaccurate information.
- Rights to privacy and security: Credit-reporting agencies must protect the personal and financial information that they collect and share about consumers from unauthorized access and usage. Without your permission, bureaus generally may not share your information with third parties, except when permitted by applicable law.
Knowing your rights is essential to making sure your credit reports are accurate and private; it ensures your opportunity to correct mistakes and protects your financial reputation.
Disputing Errors On Your Credit Report
Mistakes can happen, and credit reporting errors are not uncommon. Inaccurate information on your credit report can harm your creditworthiness and potentially lead to denied credit applications. If you discover any errors, it’s essential to take immediate action to have them corrected. To dispute an error on your credit report, you should follow these steps:
- Gather evidence: Obtain copies of any payments or correspondence you may have had confirming your payments and proving the information is inaccurate. This could include receipts for payments, bank statements or documentation of written communication you’ve had with your creditor.
- Compose a dispute letter: Write a clear and concise dispute letter to the credit bureau explaining the exact error and presenting evidence you have gathered along with copies of the relevant documents and a specific request to remove the mistake from your credit report right away.
- Send the dispute letter: Send the dispute letter to the credit bureau by certified mail with the return receipt requested. That way, you have proof that they received the letter, and you will know from the return receipt when they received it.
- Follow up: Save all correspondence and follow up with the credit bureau to see if they are investigating your dispute. The credit bureau has 30 days to investigate your dispute and provide you with the outcome. If they fail to respond in the allocated time, it is considered a violation of the Fair Credit Reporting Act (FCRA), and you have legal recourse to take action against the credit reporting agency.
Recourse Against Credit Bureau Errors
In cases where the inaccuracies or fraudulent activity on a credit report have caused significant harm or where the credit reporting agency failed to take appropriate action, individuals may also have grounds for a lawsuit against the credit reporting agency. The lawsuit may be filed either individually or through class‑action litigation, in which numerous consumers are injured by similar inaccuracies or fraudulent reporting. They can seek damages for any financial losses, emotional distress, or other harm they have suffered as a result of the inaccuracies or fraud.
If you decide to sue for damages, it is possible to file separate, independent lawsuits against each of the three major credit reporting bureaus—Equifax, Experian, and TransUnion—if each has reporting errors. These lawsuits would address the specific inaccuracies or violations committed by each bureau individually. In the event only one of the agencies reports an error, legal action would be taken solely against that bureau to address the mistake. In this scenario, there is a strong case for a jury verdict to award damages in your favor as only one of the three credit bureaus has reported an error, while the other two did not report the same error. It would be advisable to speak to a consumer law attorney who deals with credit reporting issues to see what legal recourse may be available and discover the potential damages you may be entitled to.
An attorney who routinely handles consumer litigation cases dramatically improves your odds of success. It is important, if you find yourself facing an error on your credit report or the credit reporting agency didn’t respond to you, to consult with an attorney with knowledge of consumer protection or credit reporting laws to determine the best course of action and ensure your rights are protected.
Call Loker Law For A Free Consultation
Consumers need to realize that, despite the fact that credit bureaus have immense power over our lives, they are not above the law. When credit reporting errors happen, there are legal options available to you, and if you suspect that you were a victim of a credit reporting error, you should speak with a credit reporting attorney to help you understand your rights and your options.
At Loker Law, we have handled hundreds of consumer litigation matters, and we want to help you fight back against the credit reporting bureaucracy to correct errors and protect your rights. Call us to schedule a free consultation with one of our consumer defense attorneys today and learn more about how we can help you.
