Protecting Your Credit

Protecting Your Credit: A Comprehensive Guide to the Fair Credit Reporting Act

The Federal Fair Credit Reporting Act (FCRA) is a piece of federal legislation in the United States that governs the collection, dissemination, and use of consumer credit information. The FCRA was enacted to ensure that credit reporting agencies provide accurate and complete information to creditors, employers, insurers, and other entities that use credit reports to make decisions about consumers.

In the following article, we will:

  1. Provide an overview of the FCRA and its key provisions,
  2. Explain the rights and eligibility of consumers to pursue a cause of action under the FCRA,
  3. Examine the responsibilities of credit reporting agencies and furnishers, and
  4. Explain the steps for disputing errors on a credit report, including how to:
    1. Increase the chances of winning a credit report dispute,
    2. Variables that may impact the amount of monetary damages that can be recovered in a settlement, and
    3. The types of damages you may be entitled to as a consumer.

Finally, we will conclude with a call to action for consumers to seek assistance from experienced FCRA lawyers to protect their rights. By the end of this article, we hope you are more prepared to protect your rights under the FCRA and fight back against inaccurate credit reporting!

Section 1: What is the FCRA?

The FCRA was enacted in 1970 to regulate the credit reporting industry, and protect the privacy and accuracy of consumers’ credit information. The FCRA requires credit reporting agencies to maintain accurate, complete, and fair credit files, and to provide consumers with access to their credit reports upon request.

Under the FCRA, consumers have the right to dispute inaccurate credit report information on their credit reports. If a consumer finds an error on their credit report, they have the right to dispute any errors and have any erroneous information corrected to reflect an accurate accounting of their credit report. If a credit reporting agency, credit bureau, or credit report furnisher willfully or negligently violates the FCRA, the law imposes penalties on those organizations.

Additionally, the FCRA governs the use of credit reports by creditors, employers, and other entities. The law requires that any entity that wishes to use a consumer’s credit report first obtain consumers’ permission before accessing their credit information.

Key Provisions of the FCRA

The FCRA contains several key provisions that regulate the credit reporting industry and protect the privacy and accuracy of consumers’ credit information.

Some of the key provisions of the FCRA include:

  • Requirements for credit reporting agencies to maintain accurate and complete credit information
  • Requirements for credit reporting agencies to provide consumers with access to their credit reports
  • Requirements for credit reporting agencies to correct errors on credit reports when consumers dispute them
  • Requirements for creditors and other entities to obtain consumers’ permission before accessing their credit information
  • Penalties for credit reporting agencies and other entities that violate the FCRA, including fines and damages for consumers.

Credit Reporting Agencies have several responsibilities under the FCRA, including:

  • Maintaining accurate and complete credit information
  • Providing consumers with access to their credit reports
  • Providing help to identity theft victims
  • Correcting errors on credit reports after the information is disputed by the consumer
  • Responding to disputes from consumers within a specified timeframe
  • Providing consumers with notice of adverse actions based on their credit reports
  • Implementing reasonable procedures to ensure the maximum possible accuracy and completeness of credit information.

There are three primary credit reporting agencies in the United States. They are Equifax, TransUnion, and Experian (the “Big 3”). When a credit reporting agency fails to comply with the FCRA, it may be subject to penalties. Penalties vary according to whether or not the agency’s conduct is willful or negligent. Credit reporting agencies must be familiar with the FCRA to protect their reputations and stay in business. It should be noted that creditors, lenders, and debt collectors who furnish information to credit reporting agencies must also adhere to FCRA standards.

Section 2: FCRA Requirements for Consumers

The Fair Credit Reporting Act provides consumers with important rights and protections when it comes to their credit reports and scores.

You have the right to get a free credit report every 12 months from each of the three major credit reporting agencies (Equifax, Experian, and TransUnion). And since the beginning of the pandemic, each of the “Big 3” are allowing everyone to get their credit report free each week.

You have the right to know what is in your credit report, and you can dispute any errors that may appear on your credit report. You will learn more about disputes later in this article, but you can click here to view our detailed post on disputing with the bureaus.

Additionally, the FCRA outlines the responsibilities of credit reporting agencies and establishes procedures for resolving consumer disputes. While the FCRA does not lay out an exact roadmap for credit reporting agencies to resolve consumer disputes, it does say credit reporting agencies must respond to consumer disputes and follow certain important procedural guidelines. The credit bureaus have formed a group called the Consumer Data Industry Association (CDIA), that has published a manual on the technical aspects of credit reporting and addresses several key topics for consumers (cdiaonline.org).

To request your free credit report, visit the website of the Annual Credit Report Request Service (www.annualcreditreport.com) for digital copies of your reports, call them at 1-877-322-8228, or fill out and mail them a credit report request form.

Section 3: Common FCRA Violations

Credit reporting agencies are responsible for ensuring that the information contained in credit reports is accurate, complete, and up-to-date. When credit reporting agencies fail to comply with the requirements of the FCRA, consumers may be entitled to take legal action.

The most common FCRA violations include:

  • Failing to properly investigate disputes
  • Identity errors
    • Incorrect name
    • Similar name that is not yours
    • Incorrect Address
  • Account Status Errors
    • Closed accounts reported as open
    • Reported as owner when you are an authorized user
    • Incorrectly marked as late or delinquent
    • Incorrect date of last payment
    • Reporting outdated or inaccurate information
    • Reporting a debt as charged off when it has been paid in full
  • Data Errors
    • Reinsertion of incorrect information after it was corrected
    • Accounts appearing multiple times
    • Blank credit report
  • Balance Errors
    • Incorrect balance
    • Incorrect credit limit
  • Bankruptcy Errors
    • Marking an account as included in bankruptcy when it was not
    • Failing to remove a bankruptcy from a consumer’s credit report after 10 years
    • Reporting reaffirmed debts as discharged in bankruptcy
    • Incorrect information following a Chapter 13 bankruptcy
  • Failing to provide credit report when a consumer requests it

Credit reporting agencies that violate the FCRA may be liable for damages, including actual damages, statutory damages, and attorneys’ fees. In some cases, credit reporting agencies may also be subject to fines and penalties imposed by the federal government. It is important for consumers to be aware of their rights under the FCRA and to take action if they believe that their rights have been violated.

Section 4: Understanding Errors on Your Credit Report

Above, we listed some of the common credit reporting errors, but knowing what those are is not usually enough. Important questions remain regarding how to categorize errors on your credit report. It is important to do this before trying to dispute the information and/or file a lawsuit.

Identity Theft vs. Mixed Files

The biggest struggle for many consumers is identifying when identity theft has occurred versus when a credit bureau or furnisher has mixed your file with someone else’s. Mixed files and identity theft both result in errors on your report, and they can look very similar. However, here are a few key differences that can help you determine which issue has caused the inaccurate information to appear on your credit report:

  • Source of the Error
    • Identity theft occurs when a person’s personal information is used by another individual to open accounts or make purchases in their name.
    • In contrast, a mixed file occurs when two individuals with similar names or information have their credit reports combined–or mixed–into one file.
  • Type of Error
    • In identity theft cases, the errors on a credit report typically include accounts that the individual did not open, or the credit report contains unauthorized purchases or loans.
    • In mixed file cases, the errors can include incorrect personal information such as a wrong Social Security number, address, or employment history.
  • Credit Report Content
    • Identity theft may result in a significant increase in the number of accounts listed on a credit report.
    • Mixed files may have relatively similar numbers of accounts listed on a credit report but the accounts listed contain incorrect information.

It is important to regularly review your credit reports and to take immediate action if you notice any errors. The Fair Credit Reporting Act (FCRA) provides consumers with the right to dispute errors on their credit reports and have them corrected or removed. If you believe that your credit report contains errors due to identity theft or a mixed file, you may want to consider reaching out to a professional for assistance in resolving the issue.

Account Status Errors

An account status error is a mistake in the way a credit account is reported on a credit report. For example, an account may be reported as delinquent when it has actually been paid on time, or it may be reported as open when it was actually closed by the consumer. These errors can occur due to mistakes made by creditors, credit reporting agencies, or other data sources, and they can have a significant impact on a consumer’s credit score and overall financial health.

Resolving account status errors can be difficult because there is often a lack of clear information about what has happened with a particular account. For instance, a creditor may have reported an account as delinquent due to a mistake in their internal systems, but the consumer may have proof that the account was paid on time.

The process of resolving account status errors often requires a significant amount of time and effort on the part of the consumer, including gathering documentation, making repeated contact with the creditor and credit reporting agencies, and navigating the dispute resolution process. In some cases, it may also require the involvement of legal counsel.

How to find an experienced FCRA Lawyer

Consumers can identify an experienced FCRA lawyer by taking the following steps:

  1. Research
    • Start by researching lawyers who specialize in FCRA cases. Check the lawyer’s website, read client reviews, and look for articles or blogs the lawyer has written on the subject.
  2. Experience
    • Look for a lawyer who has substantial experience handling FCRA cases. An experienced lawyer will have a deep understanding of the FCRA, the credit reporting industry, and the common issues that arise in these cases.
  3. Results
    • Look for a lawyer with a proven track record of successful FCRA cases. Ask for references from past clients and find out if the lawyer has won substantial settlements or judgments for their clients.
  4. Communication
    • Choose a lawyer who is easy to communicate with and who is responsive to your needs. A good lawyer will take the time to understand your situation and will keep you informed throughout the process.
  5. Availability
    • Choose a lawyer who is available to answer your questions and provide guidance when you need it. A lawyer who is hard to reach, or who doesn’t return your calls, may not be the best choice for you.

By taking these steps, you can ensure that you find an experienced FCRA lawyer who will work hard to protect your rights and help you resolve any credit reporting errors or violations.

Section 5: Basics of Credit Report Disputes

Under the Federal Fair Credit Reporting Act (FCRA), consumers have the right to dispute inaccuracies on their credit reports. In this section, we will outline the steps for disputing errors on a credit report, and we will also identify some key ways you can increase your chances of winning your dispute.

Here are the steps for disputing errors on your credit report:

  1. Request a copy of your credit report from the credit reporting agency
  2. Review the report for errors and make a list of the inaccuracies you find.
  3. Gather documentation that shows that these inaccuracies are false.
  4. Write a detailed letter to the credit reporting agency, explaining the errors, and providing the documents you gathered to support your claim.
  5. Send the dispute letter along with supporting documentation to the credit reporting agency via certified mail. This will ensure that you receive confirmation that your dispute and supporting documents have been received by the credit reporting agency.
  6. Wait for the credit reporting agency to investigate your dispute and respond (this usually takes about 30 days).
  7. If the dispute is resolved in your favor, ask the credit reporting agency to update your credit report.
  8. Keep a watchful eye on your credit reports and make sure errors are corrected and never reinserted.

How to Increase the Chances of Winning a Dispute:

  • Provide clear and concise evidence to support your claim.
  • Follow the proper procedures and guidelines for disputing errors.
  • Stay organized and keep a record of all communications with the credit reporting agency.

Common Mistakes to Avoid During the Dispute Process:

  • Ignoring errors on your credit report.
  • Failing to follow proper dispute procedures.
  • Providing false or misleading information during the dispute process.
  • Losing or destroying records of your dispute and communications with the credit reporting agency.

By following these steps and avoiding common mistakes, consumers can increase their chances of winning a credit report dispute and ensuring that their credit report accurately reflects their credit history. For more information see our post dedicated to disputes here.

The most important advice about disputing errors on your credit report is, “Don’t give up!”

A 2022 Consumer Financial Protection Bureau (CFPB) report shows that about half of all consumers who are currently disputing information on their credit reports have disputed it before.

A 2015 Federal Trade Commission report showed that half of consumers give up after one or more tries to dispute inaccurate information. If you need help, call us, we can help you dispute credit reporting errors for free.

To view our comprehensive guide to disputing credit reporting errors, please click here.

Section 6: FCRA Damages and Settlements

If a credit reporting agency has violated your rights by putting your reputation and credit standing in jeopardy, the FCRA offers you protection. The FCRA can punish the credit reporting agencies for their actions or their refusal to take action. The FCRA provides legal recourse for consumers who have been harmed by inaccurate or incomplete credit reports. If a credit reporting agency violates the FCRA, consumers may be eligible to receive financial compensation.

Examples of damages arising out of FCRA violations can include lost credit opportunities, lost income, lost jobs or job opportunities, and lost tenancy opportunities. If you have been denied credit, housing, or a job because of incorrect information on your report, you may be entitled to the following:

  • Actual damages
    • A monetary award in the amount of what you have lost.
    • For example, if you were denied credit for a vehicle as a direct result of inaccurate credit reporting, you could be entitled to the equivalent amount of money you were denied financing for.
  • Attorney’s fees and other litigation costs
    • If you have hired a lawyer to assist you with the issues associated with inaccurate credit reporting, you are entitled to recover the fees associated with hiring them and other costs associated with litigation.
  • Punitive and Statutory Damages
    • These are damages available and can be awarded if you show the bureau or furnisher has acted willfully.
    • Statutory damages for FCRA cases range from $100-$1,000.
    • Punitive damages have no monetary limit!

It is important to note that the amount of damages recoverable in FCRA cases can vary widely, and depends on the specific facts and circumstances of each case. Consumers who have been harmed by inaccurate or incomplete credit reports should consult with an attorney to understand their legal rights and options.

In some cases, the parties may be able to reach a settlement, rather than going to trial. Settlements allow both parties to resolve the matter more quickly and with less expense than a court case. In FCRA cases, settlements typically range from a few thousand dollars to tens of thousands of dollars, depending on the circumstances.

Settlement amounts can vary greatly, and they depend heavily on the specific circumstances of each case. The exact amounts for settlements for FCRA cases are calculated in a myriad of ways, but alongside the above mentioned types of damages, there are some key factors courts examine to determine what you may be owed.

Some of those are are:

  • How you informed the reporting agency of the inaccurate information on your credit report.
  • Did you send disputes to the credit bureaus that clearly outlined what was incorrect on your report?
  • Does the credit bureau have any reason not to believe you?
  • Does the credit bureau have any reason not to take your dispute seriously?
  • If you were a victim of identity theft, the steps you took to correct the situation will be considered.
    • Did you file a police report?
    • Did you reach out to the creditors for the fraudulently opened/charged accounts?
  • What you have lost as a result of the inaccurate reporting.
    • What opportunities have you missed out on?

Note: It is important to consult with a lawyer to understand the specific damages and settlement amounts that may be potentially awarded or pursued in a particular case.

Key Takeaways Regarding FCRA Damages and Settlements:

  • The Fair Credit Reporting Act (FCRA) provides consumers with the right to recover damages in the event of credit reporting agencies or creditors violating their responsibilities under the law.
  • Damages may be recoverable for a variety of reasons, including:
    • Inaccurate or incomplete credit reports,
    • Failure of credit reporting agencies to correct errors,
    • Failure of credit reporting agencies to provide consumers with their credit reports in a timely manner, or
    • Other violations of the FCRA by credit reporting agencies.
  • As a reminder, the amount of damages that may be recoverable under the FCRA can vary greatly and depend on the specific circumstances and facts of each case.
  • In some cases, the damages may be limited to actual damages such as out-of-pocket expenses, lost wages, or other costs incurred as a result of the FCRA violation.
  • In other cases, damages may also include statutory damages, which are prescribed by the law and do not require the consumer to show they are due.

Section 7: Final Thoughts

The Fair Credit Reporting Act (FCRA) is a federal law that provides consumers with important rights when it comes to their credit reports. The FCRA requires credit reporting agencies to maintain accurate credit reports and gives consumers the right to dispute errors on their credit reports. Additionally, it outlines the responsibilities of creditors and provides consumers with the right to recover damages in cases of FCRA violations.

While it is possible for consumers to dispute errors on their credit reports and recover damages, the process can be complex and confusing. Thus, it is important to understand your rights under the FCRA and seek the help of an experienced FCRA attorney if you believe your rights have been violated.

If you believe that your rights have been violated under the FCRA, do not hesitate to call our office for a free consultation. Our experienced attorneys will be happy to help you understand your rights and guide you through the dispute process.

About The Author

Bill Clanton

Over the years my office has helped thousands of consumers who were cheated, ripped-off, and mistreated by debt collectors, credit reporting agencies, banks, credit unions, and car dealers. If you have a problem with a business being dishonest with you give me a call. I’d love to set them straight.