Credit reporting companies play a critical role in the lives of consumers, as they are responsible for collecting and maintaining information about our financial behaviors and histories. However, these companies can also cause significant harm by reporting inaccurate or incomplete information or even failing to address covered complaints in a timely and appropriate manner.
Inaccurate Credit Reporting
One common type of complaint that consumers have about inaccurate credit reporting is incomplete information. Credit reports that have inaccurate credit reporting usually contain errors, such as incorrect account balances or past-due payments, which can negatively impact a consumer’s credit score and ability to get loans or other financial products.
In addition, some credit reporting companies may simply refuse to correct mistakes or update outdated information in a timely manner, further harming the consumer.
How To Dispute Erroneous Credit Report
When you discover an error on your credit report, it’s essential to take immediate action to correct it. An inaccurate credit report can negatively impact your credit score, potentially affecting your ability to secure loans or get favorable interest rates. Here’s a step-by-step guide on how to dispute an erroneous account with a credit reporting company:
- Obtain a Copy of Your Credit Report: Before you can dispute any inaccuracies, you need to review your credit report thoroughly. Many websites and services offer free credit reports, so take advantage of these offers to get a comprehensive view of your credit history.
- Identify the Error: Once you have your credit report, go through it meticulously to pinpoint any discrepancies or erroneous entries. These could range from accounts you never opened to incorrect payment histories.
- Gather Supporting Documentation: To strengthen your dispute, gather any relevant documents that can support your claim. This might include bank statements, payment receipts, or any other evidence that proves the inaccuracy of the disputed entry.
- Submit a Written Dispute: Draft a detailed letter to the appropriate Credit Reporting Agency (CRA) explaining the error you’ve identified. Be sure to include all pertinent details and attach copies (not originals) of your supporting documents. Clearly state what you are disputing and why, and request that the error be corrected or removed.
- Keep Detailed Records: It’s crucial to maintain a record of all your interactions with the CRA. This includes copies of the dispute letter, any supporting documents you’ve sent, and any correspondence you receive from the CRA. This will be invaluable if you need to escalate the dispute or provide evidence of your efforts to resolve the issue.
- Follow Up Regularly: Don’t assume that your dispute will be resolved immediately. It may take some time for the CRA to investigate and make a decision. Regularly check the status of your dispute and be prepared to provide additional information if requested.
- Review the Outcome: Once the CRA has completed its investigation, they will provide you with the results. If the dispute is resolved in your favor, the erroneous entry will be corrected or removed. If not, you have the right to add a statement to your credit report explaining the dispute.
Challenges in Resolving Credit Disputes
Even if you properly submit a credit dispute, a growing number of consumers have complained to regulators that credit reporting companies often fail to address complaints in a satisfactory manner. Credit reporting companies are required by law to investigate any disputed information on a consumer’s credit report, but they may not always do so thoroughly. This can leave consumers feeling frustrated and powerless after taking lengthy steps to have their individual credit files corrected. This is especially so if the consumer is relying on their credit score to qualify for important financial products such as a mortgage or auto loan.
Looking At The Pattern of Complaints
In 2021, Equifax, Experian, and TransUnion together reported relief in response to less than 2% of covered complaints, down from nearly 25% of covered complaints in 2019. That drop in response, caught the attention of the Consumer Financial Protection Bureau (CFPB) after consumers submitted more than 700,000 complaints to the agency. This represented more than 50% of all complaints received from January 2020 through September 2021.
The CFPB expects credit reporting companies to provide complete, accurate and timely responses to consumer disputes yet consumers submit more complaints about inaccurate information on their credit and consumer reports than about any other problem.
As a result, the agency released a 2022 report detailing consumer complaint response deficiencies with Equifax, Experian and TransUnion. Consumer Advocate Andy Spears, who blogs about a range of consumer protection issues, said,
“The bottom line is vigilance is necessary in order to hold the credit bureaus accountable. These reporting agencies won’t simply correct their behavior – consumers must take action, sometimes repeatedly, to get their attention.”
Key Findings Of CFPB Report
Overall, consumers describe a consumer reporting system that is not working for them and the serious consequences that follow when inaccurate information is—and remains—on their consumer reports. Other key findings from the report include:
- Equifax, Experian, and TransUnion relied heavily on template complaint responses instead of providing meaningful and thorough responses to consumers, despite having up to 60 calendar days to respond.
- Beginning in early 2020, Experian and TransUnion stopped providing substantive responses to consumers’ complaints if they suspected that a third-party was involved in submitting a complaint.
- In many instances, Equifax and TransUnion promised to investigate but failed to provide the outcomes of their investigations to the CFPB and instead stated that they would forward the complaints to their “dispute channel.”
Consumers Have Legal Rights
The Fair Credit Reporting Act (FCRA) is a federal law that promotes the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. Under the FCRA, both furnishers of information to CRAs and CRAs are required to take steps to ensure the maximum possible accuracy of their information.
Additionally, the CFPB recommends that consumers be aware of their rights and options when it comes to dealing with credit reporting errors. If you have submitted a complaint to a credit reporting company and believe that the company has not adequately responded, you may have legal recourse.
An experienced consumer protection attorney can help someone determine the strength of their case if they have been negatively impacted by a credit reporting company and whether they have grounds to take legal action for failure to address complaints. Reporting covered complaints to the CFPB can also help ensure that consumers have a fair and accurate credit reporting system.
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Led by attorneys Michael D. Finn and J. Andrew Meyer with over 75 years of experience, the Finn Law Group is a consumer protection firm dedicated to protecting the rights of consumers. Contact our office for a free consultation if you feel that need legal counsel to resolve a credit related dispute. This article is provided for informational purposes only and should not be construed as legal advice. Follow us on Twitter for more on credit related issues.