What Is A Credit Report?
A credit report gives a summary of an individual’s credit history, including debt and open credit lines. The report is provided by one or more consumer reporting agencies (CRAs) to potential lenders giving them information to help make decisions on an individual’s financial requests, from car loans to starting a business.
The Importance of a Credit Report
A good credit report can be a huge factor in what an individual can access financially. A poor credit report may temporarily halt an individual from getting a home loan or financing a car. However, as with report cards in school, an individual can always work to improve their credit standing so that future credit reports better reflect their financial education.
But errors on a credit report can happen to anyone, regardless of where they stand financially.
The Fair Credit Reporting Act
Established in 1970, the Fair Credit Reporting Act (FCRA) was created to prevent consumers from being unjustly damaged because of inaccurate or arbitrary information. Some of the unjust dangers include:
MERGED FILES
-When information from one consumer’s file merges with another consumer’s file. Merged files can result in one individual’s credit being tarnished by the other individual’s damaged credit. These are common in cases where the names, addresses, or even just the social security numbers are very similar. One real world example is a friend of mine had a Chapter 7 Bankruptcy show up on his Equifax report, causing him to be turned down for a loan. The case number on the Bankruptcy actually correlated back to a Chapter 7 that had been filed by his father, that my friend was in no way a party to. They did however, have the same first and last name and lived at the same address.
IDENTITY THEFT
-When one individual steals the identity of another individual to gain access to financial records, open new lines of credit, and generally commit fraud in the name of financial gain.
UNAUTHORIZED ACCESS
-When someone accesses an individual’s credit rating without permission or a permissible business purpose. Accessing the report causes the rating to go down, and unlawful access can result in a larger dip in the credit rating.
INACCURATE PUBLIC RECORDS
-When a credit report contains outdated or incorrect credit information, such as an ongoing lawsuit that you were in fact victorious on, or a judgment that has since been paid.
STALE OR RE-AGED DEBT
-When creditors alter the date of last payment to keep the item on a credit report longer than they otherwise should. Regardless of how many times a debt changes hands, the limitations period still starts to run at the date of first delinquency.
What the Dispute Process Looks Like
If an individual discovers an inaccuracy in their credit report, the law gives them the right to dispute that item.
The process starts by sending a dispute letter, written and submitted by certified mail with a return receipt requested. The individual should include as much information about themselves, such as full social security number and full driver’s license number, and the account in question as possible to ensure accuracy. The dispute letter should also include any and all documents that you have that would substantiate your dispute.
Once a dispute gets submitted, both the CRAs and the furnishers are required to reinvestigate the issue. The furnisher is the creditor or other such provider of the original information. This process which will generally involve communication with the furnisher of that information and require the CRAs to provide the correct or delete the information.
Free Consultation Available
Interested parties can get a free copy of their credit report once a year from each of the three CRAs at www.annualcreditreport.com. Contact me now for a free consultation, including a complimentary credit report review. In some cases, we may be able to help dispute the inaccuracies and, if necessary, discuss the possibility of bringing suit against the CRAs and/or furnishers.