There's an Error in My Credit Report

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• Reports Can Only Be Furnished for a Permissible Purpose
• Information That Must Be Excluded From the Credit Report
• CRA Procedures Should Avoid Errors
• Reinvestigation Required in Cases of Disputed Accuracy

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 Equifax, Transunion and Experian, may be liable to the consumer for damages.

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

• failure to furnish a consumer report for a permissible purpose
• listing information that is required to be excluded under the law
• failure to follow reasonable procedures to assure maximum possible accuracy of the consumer’s information contained in their credit file
• failure to conduct proper reinvestigation

Reports Can Only Be Furnished for a Permissible Purpose

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
• Collection of an account
• Employment
• Insurance underwriting
• 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.

Information That Must Be Excluded From the 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
• Any other adverse item of information

CRA Procedures Should Avoid Errors

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 inaccurately reports consumer information—the underlying procedure that lead 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 late of missed 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
• Dormant account shown as active when consumer had requested closed

Reinvestigation Required in Cases of Disputed Accuracy

If a consumer notifies the CRA that accuracy of a consumer’s file is disputed by the consumer, 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 inaccurate information
• Record the current status of the disputed item or delete the item
• 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. If a consumer disagrees with the results of the investigation, they should discuss these concerns with an experienced Washington 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.