Your Credit Report Matters More Than You Think
Your credit report influences nearly every major financial decision in your life. It determines whether you are approved for a mortgage, what interest rate you pay on a car loan, whether a landlord accepts your rental application, and in some cases, whether an employer extends a job offer. When the information in that report is wrong, the consequences can be severe.
The good news is that federal law gives you clear rights when errors appear on your credit report. The Fair Credit Reporting Act (15 U.S.C. § 1681) requires credit bureaus to follow reasonable procedures to ensure the accuracy of the information they report. When they fail, you have the right to dispute errors and, in many cases, the right to pursue legal remedies.
What the FCRA Requires of Credit Bureaus
The three major credit bureaus -- Equifax, Experian, and TransUnion -- collect and maintain records on approximately 200 million American consumers. Under the FCRA, these bureaus are required to:
- Follow reasonable procedures to ensure maximum possible accuracy of the information they report
- Investigate disputes you submit within 30 days (or 45 days in certain circumstances)
- Correct or delete inaccurate, incomplete, or unverifiable information
- Provide you with a free copy of your credit report once per year through AnnualCreditReport.com
- Notify you when negative information is added to your report
These are not suggestions. They are legal obligations, and credit bureaus that fail to meet them may be held liable under federal law.
How to Get Your Free Credit Reports
The first step in protecting yourself is reviewing your credit reports. You are entitled to one free report from each of the three major bureaus every 12 months. The only authorized source for these free reports is AnnualCreditReport.com. Be cautious of websites that claim to offer free reports but require a credit card or sign you up for paid monitoring services.
We recommend pulling all three reports because each bureau maintains its own records. An error may appear on one report but not the others.
Common Types of Credit Report Errors
Credit report errors are more common than most people realize. A 2013 study by the Federal Trade Commission found that one in four consumers identified errors on their credit reports that could affect their credit scores. Common errors include:
- Mixed files: Information belonging to another person with a similar name or Social Security number appears on your report
- Outdated accounts: Negative information that should have aged off your report still appears (most negative items must be removed after seven years)
- Incorrect balances: An account shows the wrong balance or payment history
- Accounts belonging to someone else: A former spouse's accounts, a relative's debts, or a complete stranger's information appears on your file
- Fraudulent accounts: Accounts opened by identity thieves in your name
- Duplicate accounts: The same debt appears more than once, often under different creditor names
- Incorrectly reported late payments: Payments that were made on time are marked as late
The Dispute Process: Step by Step
If you find an error on your credit report, the FCRA provides a structured process for getting it corrected. Here is how it works:
- Identify the errors. Go through each report line by line. Note every account, balance, and status that is inaccurate. Write down the specific details of what is wrong and what the correct information should be.
- Write a dispute letter to each bureau. Address your dispute to the specific bureau that is reporting the error. Your letter should clearly identify each item you are disputing, explain why the information is inaccurate, and request that it be corrected or removed. Include copies (not originals) of any supporting documents.
- Send your dispute via certified mail with return receipt requested. This creates a paper trail proving when the bureau received your dispute. This is important because the clock for the bureau's response starts when they receive your letter.
- The bureau has 30 days to investigate. Once the bureau receives your dispute, it must conduct a reasonable investigation within 30 days. The bureau is required to forward your dispute and all relevant information to the furnisher (the company that reported the information) and report the results back to you.
- Review the results. The bureau must provide you with written results of the investigation, including a free copy of your report if the dispute resulted in a change. If the information was corrected, the bureau must also send the corrected information to anyone who received your report in the past six months.
If you have not checked your credit reports recently, go to AnnualCreditReport.com today and pull all three. Review each one carefully. If you find errors, document them in writing and send dispute letters to the relevant bureaus via certified mail. Keep copies of everything you send and receive.
What to Do If the Dispute Fails
Unfortunately, credit bureaus do not always resolve disputes correctly. They may verify inaccurate information without conducting a meaningful investigation, fail to respond within the required timeframe, or correct the error only to have it reappear on a later report.
If any of these things happen, you have additional options under the FCRA:
- Add a consumer statement. You have the right to add a brief statement to your credit report explaining your side of the dispute. This does not fix the underlying error, but it becomes part of your file.
- Dispute directly with the furnisher. You can send a dispute letter directly to the company that reported the inaccurate information. Under the FCRA, furnishers have their own obligations to investigate disputes.
- File a complaint with the CFPB. The Consumer Financial Protection Bureau accepts complaints about credit reporting issues and forwards them to the bureau for a response.
- Consult with an attorney. If the bureau has failed to correct a clear error after a proper dispute, you may have a legal claim under the FCRA.
Damages Available Under the FCRA
The FCRA provides several categories of damages for consumers whose rights have been violated:
- Actual damages: Compensation for real harm you suffered, such as being denied credit, paying a higher interest rate, losing a job opportunity, or experiencing emotional distress
- Statutory damages: Up to $1,000 per violation for willful noncompliance, even if you cannot prove specific monetary harm
- Punitive damages: Additional damages that may be awarded when a credit bureau's violation was willful, meaning they knew or should have known their conduct was illegal
- Attorney's fees and costs: If you prevail in an FCRA case, the defendant is required to pay your reasonable attorney's fees and litigation costs
The FCRA contains a fee-shifting provision, which means that if you bring an FCRA case and prevail, the credit bureau or furnisher is required to pay your attorney's fees. This is why most consumer protection attorneys, including our firm, handle FCRA cases at no out-of-pocket cost to the client. You do not need to pay a lawyer up front to enforce your rights.
When to Contact an Attorney
You can contact a consumer protection attorney at any stage of this process. Some people prefer to try the dispute process on their own first, and that is perfectly reasonable. Others prefer to have an attorney involved from the start to make sure everything is done correctly.
However, there are certain situations where speaking with an attorney sooner rather than later is particularly important:
- You have already disputed the error and the bureau failed to correct it
- The error caused you to be denied credit, housing, or employment
- The same error keeps reappearing after being corrected
- You are dealing with identity theft and the bureaus are not removing fraudulent accounts
- Multiple bureaus are reporting the same inaccurate information
An attorney can evaluate whether you have a viable claim, advise you on the best course of action, and represent you in litigation if necessary. Under the FCRA's fee-shifting provision, there is no cost to you for the attorney's services if you prevail.