Four Ways to Protect Your Credit History from Errors and Misuse
Understanding credit bureau obligations under the Fair Credit Reporting ActBy Doug Mentes, Esq. | Reviewed by Canaan Suitt, J.D. | Last updated on November 22, 2023
Use these links to jump to different sections:
- 1. Make Sure Your Credit Report Is Only Being Provided for Permissible Purposes
- 2. Make Sure Adverse Information Is Excluded From Your Credit Report
- 3. Check for Errors in CRA Procedures
- 4. Make Sure You Get a Proper Reinvestigation
- Find an Experienced Consumer Law Attorney
The Fair Credit Reporting Act (FCRA) requires that consumer reporting agencies (CRAs) meet certain legal obligations to consumers. Failure to meet these requirements could be a violation of the FCRA. If that violation injures a consumer, the CRA (such as major credit bureaus Equifax, Transunion, or Experian) may be liable to the consumer for damages.
Here are four common reasons why a CRA may be in violation of the FCRA and the steps you can take to address them:
1. Make Sure Your Credit Report Is Only Being Provided for Permissible Purposes
The CRAs provide credit reports to users of the information. Users are typically credit card companies, insurance companies, and employers. Those users must promise to the CRA that the information will only be used for a permissible purpose—which generally includes:
- Offering credit or raising a credit limit;
- Collection of an account;
- Insurance underwriting; and
- Legitimate business need
Employment background checks will require written authorization from the consumer. But, often, consumers implicitly give permission to pull their credit, like when they are applying for a loan. Many users do not need express permission to pull a consumer’s credit report, as in the case of a debt collector.
2. Make Sure Adverse Information Is Excluded From Your Credit Report
The FCRA requires certain information to be excluded from a consumer’s credit report after a period of years. For example, a consumer bankruptcy can be reported for up to 10 years; after 10 years, that bankruptcy information must be removed from the consumer’s credit file.
Seven years is the maximum reporting time for most other negative information, which includes:
- Civil suits, judgments, and records of arrest;
- Paid tax liens;
- Accounts placed for collection or charged to profit and loss; and
- Any other adverse item of information.
3. Check for Errors in CRA Procedures
CRAs are evaluated on their procedures, which must be reasonable and designed to avoid the violations of the FCRA explained above. It is not necessarily a violation of the FCRA if a CRA reports incomplete or incorrect information about a consumer—the underlying procedure that leads to those credit report errors must be reviewed.
Material errors made by the CRAs can lead to a decrease in a consumer’s credit score. They include:
- Error in reporting missed or late payments;
- Error in reporting amount of derogatory public records;
- Error in reporting accounts to collection;
- Error in reporting inquiries for new credit;
- Duplicate entries of the same information; and
- Showing a dormant account as active when the consumer had requested it closed.
4. Make Sure You Get a Proper Reinvestigation
If a consumer sends a dispute letter notifying the CRA of inaccuracies in their credit history, reinvestigation by the CRA is required. In a reinvestigation, a CRA must:
- Assess no cost to the consumer;
- Conduct a reasonable investigation;
- Determine whether the disputed information is inaccurate;
- Consider all relevant information submitted by the consumer in its investigation;
- Notify the furnisher of the inaccurate information;
- Record the current status of the disputed item or delete the item; and
- Complete the reinvestigation within 30 days from the date it receives notice from the consumer.
After reinvestigation, the CRA will notify the consumer of the results, as well as the fact that they are entitled to a free consumer report.
Find an Experienced Consumer Law Attorney
If a consumer disagrees with the results of the dispute process, they should discuss these concerns with an experienced consumer law attorney. That attorney can help determine if they’re entitled to damages from a CRA or furnisher of credit information.
For more information on this area of law, see our overview of consumer law.
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