The Fair Credit Reporting Act (FCRA) is a federal law designed to protect consumer credit information and regulate its use by credit reporting agencies. The FCRA aims to ensure fairness, accuracy, and privacy in the collection and sharing of consumer credit information for the purposes of creating credit reports.
Right To Fair And Accurate Credit Reports
The FCRA requires credit reporting agencies to maintain and report fair and accurate information in their reports. Credit reporting agencies (CRAs), like Experian, TransUnion, and Equifax, collect consumer credit information, retain that information, and sell it. Major CRAs will create a credit score for the individual based on the information contained in these credit files. While the factors each credit reporting agency uses vary, factors like the number of credit accounts open, payment history, and the presence of delinquency play a substantial role in how that score is calculated. Determinations made by the agency in this credit report can be a deciding factor for major parts of a consumer's life. As this information is so important, it is necessary that the information in the file be complete and accurate, as those errors may substantially affect an individual's creditworthiness.
Common Credit Reporting Errors
To determine if there are any errors in their credit reports, a consumer must obtain the reports from the major credit agencies (Equifax, TransUnion, Experian). All consumers are entitled to a free credit report once every 12 months from the national credit bureaus at AnnualCreditReport.com. Due to COVID-19 hardship, the major credit bureaus are offering all U.S. consumers free weekly credit reports through April 20, 2022. After April 20, 2022, if the free yearly credit report has already been redeemed, customers may still obtain a report from the site above. Reports will generally cost from $15 to $20 per credit agency report. Once the reports have been received, review the reports carefully for errors. Common credit reporting errors involve personal information, reporting, balances, and data management.
Identity Information Errors
Personal information errors generally involve identity information. Identity information issues might include the wrong name, phone number, or address associated with the credit file or report. Such issues might also involve accounts that have been included in the file but are not associated with the correct consumer. These issues might occur when the individual has the same or a similar name as another customer served by the credit reporting agency or if an account has been opened fraudulently by another person in the consumer's name.
Reporting Of Account Status
Account status issues involve inaccurate reporting of the status of debts, accounts, or listing of accounts. For example, a credit report may indicate that the status of a credit card is late or delinquent, suggesting that the consumer has not paid their bills on the credit account, even though the individual has paid the amount and is current on the account. Other common status reporting issues include:
- Closed accounts reported as open
- Reporting as the owner of the account when only an authorized user
- Duplication of debt listings
Balance Errors
Balance errors involve the amount of credit out of a consumer's total credit limit. Credit utilization is the percentage or amount of credit that an individual has used out of their total credit limit. The consumer's total credit limit is the total amount of each credit limit on their active credit accounts. Institutions and reporting agencies often rely on credit utilization to determine the consumer's credit score. If this percentage is incorrectly reported, the usage percentage will change, affecting credit score calculation and, potentially, overall creditworthiness.
Data Management Errors
Data management errors occur when information in the credit file has been attributed to the wrong parties or has been deleted and reintroduced after deletion. For example, a consumer may recognize incorrect information on their credit report and initiate a dispute. The credit reporting agency determines that the information is incorrect and removes the information from the file. However, improper data management or a system error may cause the information to be reintroduced to the file. Depending on the nature and severity of the inaccuracy, the consumer’s credit score might be drastically affected, resulting in difficulties in credit transactions.
How To Resolve Credit Report Errors
If a consumer identifies errors in their credit report, they should submit a written dispute by mail to the CRA outlining the dispute. The CRA has 30 days to investigate the dispute. If the business determines that the information is inaccurate, the major CRAs must update their reports. In addition, they must provide the consumer with a revised report after the investigation has concluded.
Hiring An FCRA Attorney In New York
Credit reporting issues can have a profound effect on your credit score. When identified, you should act quickly to dispute the error. If the reporting issues persist or if you believe that a violation has occurred, an attorney may be able to help. Law Office of Simon Goldenberg is dedicated to protecting consumers' rights. We will work hard to help obtain the remedies that you deserve. For a free consultation, call (888) 301-0584 or contact us online.