Your Rights Under the Fair Credit Reporting Act
TransUnion, Experian and Equifax are the three nationwide credit reporting agencies also known as credit bureaus. They maintain credit files on virtually every American who has ever applied for credit. The information in your credit file is used to compile your credit report and your credit score.
Your credit report is the credit bureau’s report on you. From the information contained in its credit file on you, the credit bureau calculates your “credit score,” which is a number that reflects your credit worthiness at a given point in time. Consumers with higher scores can obtain credit and insurance at favorable rates interest rates. A good score is between 680 to 760. Anything less than 620 is considered subprime and results in higher costs of credit.
Inaccuracies in your credit report can cause you to have a lower credit score than you should have if the information were accurate. Your credit report may be inaccurate due to identity theft or because the credit bureau mixed your credit file with some other person’s file.
Identity thieves obtain credit cards or even car loans in a consumer’s name. The thief then inevitably defaults on the obligations and the affected creditors report a default to the credit bureaus. The credit bureaus, who use computers to collect the credit information, may record the bad credit information in the innocent consumer’s name. Sometimes, even after being informed of the identity theft, the credit bureaus fail to correct the innocent consumer’s credit report.
The credit bureaus sometimes mix one consumer’s credit information with those of another person who has bad credit. These so-called “mixed file” cases are almost always entirely the credit bureaus’ fault. The credit bureaus use complex formulas to sort out credit information that is sent to them by hundreds of thousands of creditors, formulas that sometimes fail to work. At times, even after being informed that another person’s credit information is mixed into the consumer’s credit report, the credit bureaus refuse to correct the innocent consumer’s credit report.
Your Legal Rights
The Fair Credit Reporting Act requires the credit bureaus to correct the consumer’s credit report once it been informed of any inaccuracies. However, the consumer must follow specific dispute procedures to get the credit bureaus to correct the inaccurate credit reports.
It is important to follow the dispute procedures carefully and to document your efforts to get the credit bureaus to correct any inaccuracies. Be sure to keep copies of all documents you sent to and received from the Credit Bureaus.
If you follow the dispute procedures and the credit bureaus still refuse to correct the inaccurate information, you may have a valid legal claim for damages against the credit bureaus and, in some cases, the companies that furnished inaccurate information.
The damages that might be recovered in a Fair Credit Reporting Act lawsuit include damages for being denied credit, for having to pay higher interest rates on credit cards or mortgages, compensation for harassing telephone calls from bill collectors, and/or emotional distress. In addition, as part of any settlement, the credit bureaus will typically agree to correct your credit reports.