What If You Find Mistakes in Your Credit Report?
Get to know the laws consumer reporting agencies must follow
on March 26, 2018
Updated on July 22, 2022
The large consumer reporting agencies (CRAs) maintain credit files on approximately 200 million Americans. CRAs include Experian, Transunion and Equifax, as well as many smaller firms. They have many obligations, required under the Fair Credit Reporting Act (FCRA), for the credit information they keep.
The CRAs provide credit reports to “users” of the information. Users are typically credit card companies, insurance companies and employers. Those users must promise the CRA that the information will only be used for “permissible” purposes, which generally include:
- Offering credit
- Collection of an account
- Insurance underwriting
- Legitimate business need
There are extra burdens on both the CRA and user for employment purposes. The employer must provide a disclosure to the employee, and receive written authorization to pull a background check. Often, individuals implicitly give permission to pull their credit, like when they are applying for a loan. However, many users (a debt collector, for example) do not need express permission to pull a consumer’s credit report.
The law requires certain information be excluded from a credit report after a certain amount of time. For example, consumer bankruptcies can be reported for 10 years, and the maximum reporting time for most other negative information is seven years:
- Civil suits, judgments and records of arrest
- Paid tax liens
- Accounts placed for collection or charged to profit and loss
- Any other adverse item of information
What is Required of CRAs?
If an individual finds that a CRA reported incorrect information about them that is not necessarily a violation of the FCRA, CRAs are judged on their procedures. Those procedures must be reasonable and designed to avoid violations of the law. For example, CRAs must maintain reasonable procedures to avoid violations on:
- listing information and credit history that is required to be excluded under the law
- furnishing consumer reports for permissible purposes
CRAs must follow reasonable procedures to assure maximum possible accuracy of the consumer’s information contained in their credit file. Inaccurate information within a credit report could be a violation of the FCRA, but the individual must know how or why the mistake was made in order to determine if the CRA failed to follow a reasonable procedure.
If a consumer notifies the CRA that they are disputing the completeness or accuracy of information contained in a file, reinvestigation by the CRA is required. In a reinvestigation, a CRA must:
- Assess no cost to consumer
- Conduct a reasonable reinvestigation
- Determine whether the disputed information is inaccurate
- Consider all relevant information submitted by the consumer in its reinvestigation
- Notify the “furnisher” of the disputed information
- Record the current status of the disputed information or delete the item
- Complete within 30 days from the date it receives notice of the dispute from the consumer
If, after the reinvestigation, the negative information is to remain on the consumer’s credit file, the consumer will be notified and provided an opportunity to obtain a free copy of your credit report. If they’re further concerned the CRA did not maintain proper procedures, or has denied a request to remove the information requested, the consumer should discuss these concerns, the dispute process, and further information on credit report errors with an experienced Maryland consumer law attorney.