FAIR CREDIT REPORTING ACT
Fair Credit Report & Credit Report Dispute Letter Services
A credit report is a summary of credit history, demographic information, and court proceedings that reflect a consumer’s financial history. While there are a substantial number of consumer reporting agencies or CRAs, most of us generally think of the Big 3, being Equifax, Transunion, and Experian. A good credit report is an essential part of any consumer’s financial health. Whether it is a new car, a new home, lease an apartment, or even apply for a job, your credit report can make the difference between getting the result you want, or not. A few years ago an FTC survey called a poor credit history the Scarlett Letter of the 20th Century . Unfortunately credit reporting errors are quite common.
WHAT ARE MY RIGHTS?
The Fair Credit Reporting Act was drafted to prevent consumers from being unjustly damaged because of inaccurate or arbitrary information . The Fair Credit Reporting Act requires that each credit report issued by each Consumer Reporting Agency be held to the standard of maximum possible accuracy. There are a number of ways that a credit report can be inaccurate. Below are the most common ways. THIS IS NOT CREDIT REPAIR!
A merged file is when information from one consumers file is merged into the file of another consumer. This frequently occurs with common names. Some estimates say that up to 35% of merged files involve family members with the same or similar names. This can cause a lot of problems with a consumer when a negative event from someone else’s file is merged into theirs. Merged files often result when a parent and child have same name and use suffixes like Junior or III
This is a common problem affecting credit reports. Generally when someone steals your identity they are generally doing so to run up bills with no intention of paying them back. This is a great reason to check your reports frequently. Once Identity theft is suspected the best thing to do is 1. Get a police report 2. Fill out an identity theft affidavit from the Federal Trade Commission. http://www.consumer.ftc.gov/articles/pdf-0094-identity-theft-affidavit… and submit to the the relevant creditors 3. Notify the big 3 CRAs. It may be possible to have the CRA place a freeze put on an account. This allows a person to add a consumer statement to the report, and add a phone number to be called for verification of the application, prior to any new credit being authorized.
Federal law Restricts access to your credit report to certain people or entities with a “legitimate business need.” This includes those considering granting you credit, landlords, insurance companies, employers and potential employers, creditors, debt collectors, and some others. Accessing your credit reports or “hard pulls” may affect your credit score. If someone does not have a permissible business purpose and accesses your credit, you may have a cause of action against them.
INACCURATE PUBLIC RECORDS
The CRAs frequently use independent agencies to search the public records and report back. Sometimes the records are not reported correctly, or are reported more than once. Another issue is that they do not always contain current information. For example maybe you have been sued on a debt, but have since defeated the suit. Or maybe you lost in court, but have since satisfied the judgment and been granted a release by the creditor. Your credit report should accurately reflect the current status of that judgment. Another area where there are often issues is after you have filed for bankruptcy. If that account was properly included in the bankruptcy, and the bankruptcy resulted in a discharge, then that account should be reported as discharged in bankruptcy.
STALE OR REAGED DEBT
Another common source of inaccurate information on a credit report is a debt that was once valid but is now so old that it is stale. Generally speaking, most negative tradelines should come off of your credit report 7 to 7 ½ years after the initial delinquency. This limitation period should not be confused with the 4 year statute of limitations that Texas has for bringing a suit on most debts, or the 10 year period that a valid Texas judgment may be collected on. Sometimes creditors will alter the date of last payment in order to stay on a credit report longer than they otherwise should. This is known as reaging a debt. This happens a frequently when a debt has been sold from an original creditor to a debt buyer or from a debt buyer to a subsequent debt buyer. Regardless of how many times a debt changes hands the limitations period still starts to run at the date of first delinquency. When a creditor re-ages the debt, this may allow you to pursue a cause of action under the Fair Credit Reporting Act and other bodies of law such as the Fair Debt Collection Practices Act.
THE DISPUTE PROCESS
If you discover an inaccuracy in your credit report, the law gives you the right to dispute that item. Once a dispute is submitted, this triggers a duty on behalf of the Consumer Reporting Agency to reinvestigate the issue. This will generally involve communication with the furnisher of that information. The dispute also creates a duty on their behalf to provide the correct information. CRAs are required to establish and follow reasonable procedures to ensure maximum possible accuracy. When CRAs fail to reinvestigate the debt, fail to establish procedures to ensure maximum possible accuracy, and fail to follow these procedures, this may allow you to pursue a cause of action against the CRAs under the Fair Credit Reporting Act. The process starts by sending a dispute letter. See sample dispute letter can be found in the FORMS and RESOURCES section of my website.. The dispute needs to be done in writing and by certified mail, return receipt requested. Be sure to include as much information about yourself, and the account in question as possible to ensure accuracy. This includes spelling out your full middle name, your full social security number, full driver’s license number, etc., as well as any documents that you may have which would show that they information being reported is in fact incorrect.
You may get a free copy of your credit report once a year from each of the 3 Consumer Reporting Agencies at www.annualcreditreport.com. Call me now for a free consultation, including a complimentary credit report review. In some cases I may be able to help you to dispute the inaccuracies. If necessary we will discuss the possibility of bringing suit against the CRAs and/or furnishers.