Can You Get Compensation for Errors in Your Credit Report?

From securing a new job to major purchases like a home or car, credit reports can significantly impact our lives. It may be comforting to know that consumers have rights under the Fair Credit Reporting Act (FCRA). Consumer reporting agencies (CRAs) that issue these credit reports may be liable if they violate the FCRA and if the violation negatively impacts a consumer.

To enforce your rights as a consumer under the FCRA or state law, reach out to an experienced consumer law attorney.

Your Rights Under the Fair Credit Reporting Act (FCRA)

Consumers have a legal right under the Fair Credit Reporting Act (FCRA) to obtain a free copy of their credit report. You can get a free credit report from one of the three credit reporting bureaus: Equifax, TransUnion, and Experian. There are also independent agencies that will provide reports for all three agencies, such as annualcreditreport.com.

The free credit report includes the consumer’s credit history, list of accounts, and payment history, but it generally does not include a credit score. Consumers typically must pay a fee to view their scores, though some lenders or services may provide them for free. If there are previous consumer disputes about credit errors, there may be a note of such.

The CRA can be in violation of the FCRA for several reasons, including:

• Listing credit information that is required to be excluded under the law
• Failure to furnish a consumer report for a permissible purpose
• Failure to follow policies to ensure the accuracy of the consumer’s information contained in their credit file
• Failure to conduct a proper reinvestigation

Consequences for Violating the FCRA

A CRA found negligent in failing to comply with the requirements of the FCRA, including disputed information, inaccurate information, or incorrect information, is liable to an injured consumer for their damages. To determine negligent conduct, a court evaluates what a “reasonably prudent person” would do if stepping into the shoes of the credit report furnisher. If the conduct of the CRA falls short of that standard, it’s negligent. If the CRA meets that standard, the consumer will not receive damages for the credit reporting error.

Consumers also have the right to file a complaint with the Consumer Financial Protection Bureau (CFPB). The agency oversees banks, lenders, and large non-bank entities, such as credit reporting agencies and debt collectors. It acts as an advocate on behalf of consumers to correct errors that are in violation of federal law. If the CFPB cannot help, it will forward the complaint to the appropriate agency that can assist.

What Are the Damages for Credit Report Errors?

If negligent, the CRA is liable to the consumer for the consumer’s actual damages in a credit report lawsuit. Actual damages typically include the following:

• Out-of-pocket expenses
• Lost wages
• Lost credit opportunities
• Financial losses from identity theft
• Emotional distress and humiliation
• Damage to reputation

Some forms of actual damages are straightforward to calculate. Violations could result in a consumer being denied credit, losing out on a job opportunity, or experiencing other calculable losses. Emotional distress damages and damages to the consumer’s reputation may be more difficult to calculate. These damages can be awarded even in the absence of out-of-pocket expenses.

Emotional distress damages require additional evidence, which can include:

• Testimony regarding the surrounding circumstances
• Testimony of the injured party’s conduct
• Corroboration of other witnesses
• Medical or psychological evidence

There is no limit to this amount as long as a consumer can prove the loss.

When Can You Get Statutory and Punitive Damages?

A CRA that willfully fails to comply with the requirements of the FCRA with respect to a consumer is liable to that consumer for damages. Those damages can be actual damages to the consumer or punitive damages. A CRA’s conduct is willful if it is with knowledge or reckless disregard of the law.

Punitive damage awards are primarily tools of deterrence and retribution. In determining a punitive damage award, courts consider the degree of reprehensibility of the CRA’s misconduct and the disparity between the actual damage award and the punitive damages award. Punitive damages must be both reasonable and proportionate to the amount of actual damages to the consumer.

The FCRA also allows for statutory damages of between $100 and $1,000 for willful violations. These damages are often pursued in class action FCRA claims. Although the amount of damages may be small to an individual consumer, the benefit of statutory damages is that consumers need not prove harm from an FCRA violation.

“A lot of these companies do it on the cheap, and every now and then they have to pay an award,” says Florida consumer protection attorney Barry Balmuth. “But it’s cheaper sometimes for them to do that than to do it right in the first place. That is the idea of punitive damages: Send a message to hopefully incentivize them to correct what they’re doing wrong so they don’t repeat it.”

Can the Credit Bureau Have To Pay Your Attorney’s Fees?

Regardless of the credit reporting agencies’ conduct, consumers who successfully prove a statutory, negligent, or willful violation of the FCRA can recover their attorney fees. This allows many consumers access to an attorney on a contingency or no-fee basis.

The Importance of the Dispute Process

Credit bureaus don’t automatically correct inaccuracies in credit reporting. They need to be formally notified. That’s why the dispute process is a critical part of protecting your rights under the FCRA.

Consumers must take the first step by filing a dispute, which tells the CRA that something in the report is inaccurate or outdated. Once the CRA receives that notice, it is legally obligated to investigate the issue, usually within 30 days. If it fails to act or conduct a superficial investigation, the consumer may have grounds for legal action.

You can file a dispute online or by phone, but a written letter with supporting documentation is usually more effective. It gives you a record of what you submitted and when. Providing evidence, such as bank statements or identification, also helps the CRA verify your claim. If you do end up in court, a judge will want to see that you followed this process and that the major credit bureau didn’t meet its legal duties in response.

How To Document Your Damages

If you’re filing a lawsuit under the FCRA, you need to document your damages. The court wants to see how the error affected your life, not just emotionally, but financially. That might include rejection letters from employers or lenders, proof of higher interest rates, or records showing lost credit opportunities.

Why You Need a Consumer Lawyer for an FCRA Case

FCRA lawsuits aren’t just about proving a mistake. You also have to meet specific legal standards, and that’s where an experienced consumer lawyer makes a difference. A lawyer can help determine whether the credit reporting agency’s conduct was negligent or willful, which directly affects what damages you can recover.

A lawyer ensures your dispute gets proper attention and shields you from the credit bureau’s legal team. Most FCRA attorneys take cases on a contingency basis, meaning there’s no upfront cost, and if you win, the CRA may be required to cover your legal fees. Contact a local consumer law attorney for legal advice and help with your claim.