The Fair Credit Reporting Act was established in 1970 when congress started to realize the impact and importance of credit, and credit being correctly reported. This law sets regulations and expectations for how your financial information reflected on your credit report is handled and reported. There are 4 common Violations of the Fair Credit Reporting Act. Those violations are:
- Old information is reported on your credit report.
- Mixing up your credit report information with another consumer.
- The reporting agency fails to follow proper complaint procedure.
- Unauthorized credit pulls by credit reporting agencies.
Old Information Being Reported On Your Credit Report
Old information on your credit report can be rather challenging, especially when you have tried to repair your credit and handle credit responsibly after credit challenges like charge offs, collections, foreclosures or bankruptcies.
Some examples of old information being reported could include:
- A debt reporting as charged off when it was paid or settled for less.
- Having late payments reflected, when those payments are not late.
- Reporting information that is more than 7 years old (with exception of chapter 7 bankruptcies)
- Reporting debts as active after they were discharged in bankruptcy.
- Listing old balances as the current balance.
- Failed to properly handle accounts that occurred as a result of identity theft.
Mixing Up Your Credit Report Information With Another Consumer
This can happen on accident, and most commonly occurs when individuals share the same name, or the name is very similar. This can also happen if social security number and birth dates are similar. Common instances when this may happen include:
- Parent/Child having the same name (Jr/Sr).
- Siblings or relatives that are close in age and similar initials.
- Responsibility for a debt being misconstrued (Child owes the debt but gets put on parents credit report or vice versa).
Reporting Agencies Fail to Properly Follow Protocol
When you file a dispute for unverifiable and inaccurate information on your credit report, the agencies must follow guidelines and regulations to verify the information. In general, they have 45 days to investigate the claim, and it can be extended up to an additional 15 days if you supply additional information. Once their investigation is finished, they have 5 days to notify you of the outcome and how it will be resolved. Following the conclusion of your investigation the reporting agency has a duty to pass their findings along to the other credit bureaus as well as provide you with a free, updated copy of your credit report.
Unauthorized Credit Pulls
Anytime someone pulls your credit report with out your permission, that is a violation of the Fair Credit Reporting Act. This includes but is not limited to:
- Landlords
- Employers
- Banks/Creditors
In order to lawfully do a hard pull your credit report they must have your written permission to do so. Typically since hard inquiries stay on your credit report for up to two years, and tend to cause some form of an impact on your credit this is taken very seriously. An example of an unauthorized pull would be someone pulling your credit report to obtain information about your assets/net worth before deciding to move forward with a lawsuit.
Another prime example would be what happened with Wells Fargo in 2016, they were found liable and agreed to pay 185 million dollars in fines for fraudulently opening accounts without the consent of the consumer to meet/ exceed sales quotas.
What Can You Do About FCRA violations?
In the unfortunate event that you find yourself victim to a FCRA Violation, you have many options. According to the Fair Credit Reporting Act you are able to file a lawsuit and can be awarded damages. However, the amount of damages that you receive depend on whether or not it was willful or neglect.
In order for damages to be determined as willful you would need to be able to prove that the credit reporting agency or credit entity unintentionally harmed you, but still violated the Fair Credit Reporting Act.
For damages to be classified as neglect, you would have to prove that the reporting agency or credit entity acted reckeless without regard for the Fair Credit Reporting Act.
If you choose not to take legal action, or do not know where to start, you are able to file a complaint with the Consumer Financial Protection Bureau (CFPB). They will help you get your complaints resolved and ensure that they never happen again. The CFPB has been responsible for overseeing all credit reporting agencies if they have more than $7 million in annual receipts.
If you would like to file a complaint with the CFPB you can do so by clicking here, or:
- Call the toll-free phone number at 1-855-411-CFPB (2372) or TTY/TDD phone number at 1-855-729-CFPB (2372)
- Fax the CFPB at 1-855-237-2392
- Mail a letter to: Consumer Financial Protection Bureau, P.O. Box 4503, Iowa City, Iowa 52244
Conclusion
It is crucial that the information on your credit report is accurate and reflects your current financial picture. Having information on your credit report that in not accurate (or maybe not even yours) can have serious consequences. A 5 point difference in your credit score can determine whether or not you qualify for prime or subprime rates on loans, credit cards, and any other credit based product.
It can be very overwhelming to comb through your credit report to make sure everything is accurate, especially if you have had a rocky credit history in the past. But it is worth it. The information on your credit report needs to be to accurate and verifiable, and if it cannot be verified then it needs to be removed. There are laws and regulations in place to help keep you and your credit protected from inaccurate, false or misleading information. Keep in mind that most negative items fall off your credit report 7 years from the first negative item, with the exception of chapter 7 bankruptcy.
If you have any questions, or would like to speak to someone about your credit history, debt or financial situation you can contact us and we will be happy to help you.
