What are Some Common Fair Credit Reporting Act Violations?

The credit reporting agencies are allowed to keep tabs on certain aspects of your financial history. Not only are they allowed to keep tabs on you, they can compile your credit information into reports and then sell your information to others who wish to evaluate the risk of doing business with you. While you may not like the idea of the credit reporting agencies (CRAs) being all up in your business, the truth is that if you understand the credit reporting and scoring system you can leverage that knowledge to your advantage. After all, earning great credit comes with some truly awesome perks and benefits.

Of course, the CRAs are still legally allowed to collect and sell your credit information. Your approval or consent is not required. The catch is this…the CRAs have to play by the rules, rules which are clearly outlined in the Fair Credit Reporting Act (FCRA). The FCRA provides you, the consumer, with some substantial rights and protections.

Inaccurate Information

If a creditor or debt collector reports incorrect information about you to any of the credit reporting agencies (CRAs), that’s not allowed. If they fail to perform a reasonable investigation after you’ve filed a legitimate dispute, that’s not allowed. Remember, however, that an error must be disputed with a CRA and they must be given a chance to correct the item. The simple existence of an alleged error on a credit report does not typically constitute a violation of the FCRA.

Here are a few examples of inaccurate information which, if disputed and not corrected, might arguably be considered to be a violation of the FCRA:

• You paid or settled an account in full, yet your credit report still shows an incorrect outstanding balance.
• The information on your credit report has been mixed with the credit information belonging to someone else.
• A debt which was discharged by your bankruptcy still shows an outstanding balance.
• A single debt you incurred is incorrectly showing up multiple times on your credit report suggesting you owe more than you actually do.

Outdated Information

The FCRA does not allow most types of derogatory information to remain on your credit reports forever. Instead there are credit reporting time limits to which data furnishers and the CRAs must adhere. Most negative information must be removed from your credit reports around the 7 or 10 year mark, depending upon the item. If an item on your credit report has not been removed by the required “purge” date or if an item has been “re-aged” to make it appear newer, either might be an FCRA violation.

Should You Sue?

This is a huge decision and should not be taken lightly. I’ve been retained as an expert witness in well over 300 of these types of lawsuits so I have a unique perspective. In MANY of my retentions there is simply no violation of any law and the consumer/plaintiff has been sold a bill of goods and unrealistic expectations by an attorney. In other retentions there appears to be an actual error, but no damages.  And no, a lower credit alone isn’t damage, which many courts have concluded.

If you do decide to sue it is probably a good idea to maintain realistic expectations. Most lawsuits settle out well before they ever make it to court, so that big payday you were hoping for is unlikely going to happen. This is especially true if your attorney was hired on contingency in which case a sizable portion of any settlement funds you receive would be used to cover your attorney’s fees.