Know Your Rights: The Fair Credit Reporting Act (FCRA)

Your credit report and credit score may have a more significant impact on your life than you realize. You undoubtedly know your credit history and credit score may determine whether you are approved for a credit card, car loan, mortgage, or other financing. But, that’s just one way credit scores can affect consumers.

First, your credit report and credit don’t just determine whether or not you’re approved for credit. They also play a significant role in the terms you’ll be offered. For instance, a negative entry on your credit report or low credit score can mean that a larger down payment is required. You may also pay higher fees and a higher interest rate. In short, lower credit scores and negative entries on your credit history can make borrowing more expensive.

Your credit report can also impact other areas of your life. A poor credit history can make it difficult to rent an apartment, and can mean that you pay higher automobile insurance rates.

With so much at stake, it’s obviously important that your credit reports are accurate. Unfortunately, many are not. One study conducted by the Federal Trade Commission (FTC) revealed that about 20% of consumers had at least one error on their credit reports. Often, these errors go unaddressed. Sometimes, that’s because consumers don’t monitor their credit reports. In other cases, they find the mistake but don’t know how to dispute inaccuracies. 

The federal Fair Credit Reporting Act (FCRA) was designed to help ensure accuracy in credit reporting, and to give consumers a clear process for disputing errors. 

The Fair Credit Reporting Act (FCRA)

The FCRA imposes responsibilities on credit reporting agencies such as Experian, Equifax and TransUnion. It also regulates creditors, debt collectors and others who furnish information to the credit bureaus. For example, a credit reporting agency or furnisher that receives a dispute typically must investigate and delete or correct the entry as appropriate.

A credit reporting agency or furnisher that doesn’t adequately investigate or take other required action within statutory time limits may be in violation of the law. Other examples of violations include:

  • Inaccurately reporting the status of a debt, such as showing a debt that has been paid in full or discharged in bankruptcy as an open account
  • Misreporting the account balance
  • Inaccurately reporting payment history
  • Re-aging debts to keep them on the consumer’s credit report beyond the 7-year drop-off point

How Do Credit Reporting Inaccuracies Happen?

Some of these inaccuracies may be honest mistakes. For example, a bankruptcy might not be noted on a consumer’s account. So, the account might continue to be reported as delinquent. The dispute process often corrects that type of problem.

Unfortunately, not all inaccurate reports are as innocent. Some result from consistent problems with a furnisher’s system. Sometimes, there’s more than one issue. For instance, a furnisher might accidentally re-report inaccurate debt, and the credit reporting agency may fail to track the disputed item. That means an item that has been successfully disputed may reappear on the consumer’s credit report.

In some cases, the misreporting is intentional. Debt collectors and debt buyers know that many consumers will settle a debt rather than wait out the dispute process. That’s especially likely if something important like a major purchase or a move hangs in the balance. So, some knowingly report or fail to correct inaccurate entries and wait. They know that if the consumer attempts to rent an apartment or buy a car and finds out that entry is standing in the way, he or she will likely make payment–even if the balance was discharged in bankruptcy, previously paid, or is outside the statute of limitations.

The FCRA and Debt Collection

The FCRA provides a process for correcting credit reporting errors and remedies–including money damages and attorney fees–for consumers whose rights are violated. The statute wasn’t written as a protection against dishonest or overly aggressive debt collectors. But, dishonest debt collectors and debt buyers may use credit reporting as a weapon. And, consumers whose rights under the FCRA have been violated can use the statute as a tool in negotiating resolution of the underlying debt.

That’s why reviewing documents for violations of the FCRA and other consumer protection statutes is a core benefit for DebtCleanse members. Every personal membership includes unlimited access to a consumer advocate attorney who will assess debt collector communications, credit reports, and other relevant materials to identify possible violations.

Since the FCRA and many other consumer financial protection statutes require a defendant who has violated the law to pay the consumer’s attorney fees, most DebtCleanse members who pursue this type of claim never pay any fees beyond the regular monthly membership. You’re not at the mercy of creditors and debt collectors. If you’re ready to take back control, register today.


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