What Good Credit Means
A summary of an individual’s credit history, a credit report serves several functions for both individuals and business. For the individual, the report serves as a historical marker of every major financial decision and a measuring stick for their current financial standing. For business, the report serves as an indicator showing them whether doing business with an individual or another company would be a sound investment. If an individual has a good report, the business can be somewhat assured they won’t lose money with the individual.
But a bad credit report does not mean an individual has not hope for the future. Like school report cards, credit reports change depending on the individual’s financial decisions. And while a bad credit report limits an individual’s financial opportunities in that moment, the individual always has the option of working to improve the report
While a credit report largely remains the responsibility of the individual, errors can occur. As a safety measure, the Fair Credit Reporting Act (FCRA) was drafted in 1970 to prevent consumers from being unjustly damaged by inaccurate or arbitrary information appearing on their report.
Examples of credit report errors can include:
MERGED FILES
-When information from one consumer’s file merges with another consumer’s file. Merged files can result in the information of a person named John C. Smith negatively effecting the information for a John J. Smith. People with the same name frequently deal with this error, but it can also affect individuals with similar names, too.
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 commit fraud in the name of financial gain. Probably the most well-known example of credit report errors, as the practice has become newsworthy in the 21st century due to its habitual usage. Anyone who hasn’t experienced identity theft probably knows someone who has, and victims of identity theft should contact the Federal Trade Commission for aid.
UNAUTHORIZED ACCESS
-When individuals or companies attempt to access an individual’s credit history without express consent. Viewing an individual’s report without consent can cause the report rating to go down, harming their current standing.
INACCURATE PUBLIC RECORDS
-When the information on the most recent version of an individual’s credit report contains outdated information, such as a settled debt or line of credit no longer open. A credit report should accurately reflect an individual’s most current credit rating status. This particular error should encourage everyone to look at their credit history at least once a year. Examples of this would include prior litigation that has been resolved in your favor, or a judgment that has since been paid, or the judgment has been paid, but the creditor has failed to generate or file a release of that judgment.
STALE OR RE-AGED DEBT
-When creditors alter the date of the last payment an individual has made on an old (stale) debt, allowing the creditors to keep the debt on the credit report longer. Debts have a shelf life with collection agencies, and re-aging the debt causes confusion for both the individual and any collection companies. Individuals who believe themselves to be victims of stale or re-aged debt to pursue legal action under the FCRA.
Starting the Dispute Process
If an individual discovers an inaccuracy in their credit report, they should immediately send a letter of dispute to the consumer reporting agencies (CRAs) and include any relevant information refuting the report’s inaccuracies, including proof of a debt being paid. Once submitted, the CRAs must reinvestigate the issue, which will generally involve communication with the furnisher of that information and require the CRAs to provide the correct information.
Free Consultation Available
The three main CRAs allow individuals to get a free copy of their credit report once a year at www.annualcreditreport.com. For more information and a complimentary credit report review, individuals can contact Foley Law at any time now. If eligible, our company may be able to help dispute the inaccuracies and, if necessary, discuss the possibility of bringing suit against the CRAs and/or furnishers.