When Credit Bureaus Have the Wrong Info
What Texans should do when a company gives credit reporting agencies incorrect data
on May 14, 2018
Updated on September 2, 2022
Credit reporting agencies (CRAs) like the big three of Experian, Equifax and Transunion rely on others to provide accurate information for the credit files they maintain. These providers of credit information are labeled “furnishers” under the Fair Credit Reporting Act (FCRA) and can include:
- Debt collectors
Role of furnishers
Most consumers understand the role of the large CRAs, but the role of furnishers is just as important. The FCRA requires furnishers provide accurate information to the CRAs and correct inaccurate information. If a consumer files an “indirect dispute” with one of the CRAs, the FCRA requires the furnisher of the disputed information to complete the following steps:
- Conduct an investigation of the disputed information
- Review all relevant information provided by the consumer
- Report the results back to the CRA within 30 days
Furnishers have the same duties under a direct dispute from a consumer about credit report errors. If the investigation shows the consumer information to be incorrect information, incomplete information, or unable to be verified, the furnisher must either:
- Modify the information
- Delete the information
- Permanently block the reporting of that information
Furnishers can be sued
When a furnisher does not comply with its requirements under the FCRA or relevant Texas consumer law, it’s liable to the consumer for damages the consumer suffered because of the furnisher’s error. Furnisher errors could result in a consumer being denied credit or losing out on a job opportunity. The amount of damages a furnisher may be liable for will depend first on the egregiousness of the furnisher conduct—whether that conduct is found negligent or willful.
- Negligent conduct is conduct that falls short of what a “reasonably prudent person” would do if stepping in the shoes of the furnisher
- Willful conduct is conduct performed with knowledge or reckless disregard of the law
Furnishers can be liable for several types of damages
Whether a furnisher’s conduct was negligent or willful, the furnisher is liable to the consumer for the consumer’s actual damages, which can include the following:
- Out-of-pocket expenses
- Lost wages
- Lost credit opportunities
- Emotional distress and humiliation
- Damage to reputation
Some damages are simple to calculate but 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 must be supported by something more than victim’s bare allegations. The consumer’s statements must be coupled with additional evidence of actual or genuine injury. That additional evidence can take the form of:
- 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 the amount of damages, if a consumer can prove the loss. Other damages consumers may recover from a furnisher which violates the FCRA include attorney fees and statutory damages of between $100 and $1,000 for willful violations.
Willful violations of the FCRA open the door for statutory and punitive damage awards. Punitive damages are primarily tools of deterrence and retribution. Punitive damages must be both reasonable and proportionate to the amount of actual damages to the consumer. In determining a punitive damage award, courts consider the degree of reprehensibility of the misconduct and the disparity between the actual damage award and the punitive damages award.
What do consumers do?
First and foremost, consumers must keep an eye on their credit reports and if there is an error the consumer should dispute it. Consumers should formally dispute the information in writing via certified mail with the bureaus because the online dispute process offered by the CRAs does not provide a reliable record of the dispute.
When consumers don’t get the results they feel they should when disputing with furnishers or CRAs, it may be time to contact an experienced Texas consumer attorney to determine if relief for their credit woes is available through the courts. For more information on this area of law, see our overview of consumer law.