The Fair Credit Reporting Act provides protection against the misuse and misreporting of your credit information. When creditors, collectors, or credit reporting agencies violate the provisions of the FCRA, it can cause a lower credit score, denial of credit, higher interest rates on loans and credit extensions, and more. It's important to recognize when the FCRA has been violated, so you can take action and prevent harm to your credit.
What Is the Fair Credit Reporting Act?
The FCRA governs the behavior of consumer reporting agencies, also called "credit bureaus," and the businesses or individuals that report information to the consumer reporting agencies (CRAs). The CRAs compile this information into your credit report. Your credit report serves an important purpose. It can determine whether you can obtain a mortgage, car loan, job, and even an apartment. The FCRA tells CRAs, creditors, and other authorized persons what they can and can't do with your credit information.
Common Violations of the FCRA
Here are some of the more common ways that creditors, collectors, and CRAs violation the FCRA.
Furnishing and Reporting Old Information
CRAs and the creditors who supply information to them must provide and keep your credit information current. When your credit circumstances have changed, and the information in your credit report isn't updated to reflect these changes, this failure might be a violation of the FCRA. Some examples of this include:
- failing to report that a debt was discharged in bankruptcy
- reporting old debts as new or re-aged
- reporting an account as active when it was voluntarily closed by a consumer, and
- reporting information that is more than seven years old (like bankruptcy) or ten years old (such as civil judgments).
Furnishing and Reporting Inaccurate Information
Your creditor must not supply information to a CRA that it knows (or should know) is inaccurate. That includes:
- reporting a debt as charged-off when you settled it or paid it in full
- misstating the balance due
- reporting late payments when you paid timely
- listing you as a debtor on an account when you were only the authorized user, or
- supplying credit information on an account where identity theft was previously reported (or failing to maintain a reasonable procedure for you to report identity theft).
CRAs can also run afoul of their obligations to report accurate credit information about you. In many instances, this happens when a credit bureau mixes your file with that belonging to someone else with similar background information. Some common cases of mixed files include:
- morphing or duplicating negative credit information with a stranger who shares a similar Social Security number
- failing to distinguish the Jr. and Sr. in similar surnames
- mixing the information of persons with the same last name and similar first names, and
- combining or mixing credit files of persons with similar names living in the same city or zip code.
Failing to Follow Debt Dispute Procedures
When you submit a written dispute about the accuracy of an item on your report, credit bureaus and your creditors must take certain actions in response. Their duties include conducting a reasonable investigation of your dispute, correcting any inaccurate information, or even removing the disputed debt from your credit report. There are a number of ways they can fall short of their duties, depending on whether they are the CRA or the creditor.
Debt Dispute Violations by CRAs
Some common violations by a CRA include failing to:
- notify a creditor that you dispute the debt that it has reported
- conduct a reasonable investigation of your dispute, or
- correct or delete any inaccurate, incomplete, or unverifiable information within 30 days (or 45 days in some cases) of receiving notice of your dispute.
Debt Dispute Violations by Creditors and Other Information Suppliers
Some common violations by a creditor or other information furnisher include failing to:
- notify every CRA involved that you dispute the debt
- submit corrected information to the CRA subsequent to investigating your dispute
- refrain from continuing to submit information that it knows (or should know) is incorrect
- conduct an internal investigation of your dispute within 30 days (or 45 days in some cases)
- provide you with a reasonable procedure, including an address, to submit a written dispute or report of identity theft, or
- inform you of the results of its investigation within five business days after it completes the investigation.
CRAs cannot release your credit report to just anybody. They can only give them to authorized persons. CRAs may disclose your report only to persons or entities that have a valid need, such as:
- insurance providers
- utility companies, and
- employers (only if you previously consented).
Requesting a Credit Report for an Impermissible Purpose
Even though your employer, creditor, or landlord might be allowed to pull your credit report, they must still have a permissible purpose to do so. If someone pulls your credit report for an impermissible purpose, then it might be a violation of the FCRA. Some examples of impermissible purposes include:
- someone pulls your credit report to determine if you're collectible before filing a lawsuit against you on an involuntary debt or other non-credit matter (for example, in determining whether to file a personal injury lawsuit)
- your employer pulls your credit report without your permission, or
- a creditor on a debt you discharged in bankruptcy pulls your credit report to check out your current financial activity.
You're entitled to notices concerning the reporting, handling, and use of your credit information. Notice violations under the FCRA might occur when:
- a creditor fails to notify you when it supplies negative credit information to a CRA
- a user of credit information (such as a prospective employer or lender) fails to notify you of a negative decision based upon your credit report
- a creditor fails to provide you with your credit score if it was used as part of any credit decision
- a creditor fails to notify you of your right to dispute inaccurate credit information
- a creditor fails to notify you of your right to obtain a free credit report, or
- a creditor or "user of information" refuses to identify the source of the credit information it obtained about you.
If any of these three types of entities (credit bureau, creditor, or information user) violated your rights under the FCRA, you might be able to sue them in state or federal court for damages. To learn more about your rights and remedies, talk to a lawyer.