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Inaccurate Credit Report can be very damaging for you. It not only prevents you from getting a good loan or mortgage but can also ruin your reputation. Federal protections can help you when Credit Reporting agencies make inaccurate reports on your credit. The Fair Credit Reporting Act (FCRA) is a federal law by which the Credit Reporting agencies are required to follow reasonable procedures to ensure that the consumers’ Credit Reports are prepared as accurately as possible.
The Fair Credit Reporting Act (FCRA) is a federal law that allows businesses or persons to get access to your consumer Credit Report only in case of a permissible purpose. The FCRA has defined these purposes as:
- In pursuit of a Court Order or a federal grand jury subpoena;
- With the written permission of the consumer;
- A credit transaction;
- Employment purposes;
- Underwriting insurance;
- Eligibility for a license or governmental benefit;
- Other legitimate business purpose;
- A request from a State or local governmental agency for child support information.
Most commonly a consumer’s Credit Report is required for a credit transaction or with the consumer’s request in writing, for example in order to get a mortgage or loan.
These purposes may seem broad in scope but often consumer Credit Reports are acquired illegally. Some examples of purposes not permitted include reports for litigation purposes for instance divorce, reports accessed by a car dealer without credit having been requested or sought, reports acquired by political or business rivals, etc.
Credit Reports are accessed with the help of a computer hook-up to the Credit Reporting agencies through a business with this access. When the report is requested, the business has indicated a permissible purpose for it. Usually an employee or a friend of an employee of the business obtaining the report does the violation. The business is then liable for violations of the FCRA, as the employee using the machine, which makes the request, has had apparent authority from the business for it. The names of the entities accessing the consumer’s Credit Report are included in a list at the bottom of the Credit Report.
Acquiring a Credit Report for a purpose other than the permitted ones is a crime. The consumer has the right to file a lawsuit against the business and the person accessing the Credit Report without permission in federal court to recover either the actual damages or $1,000 whichever is less, if intentional, punitive damages allowed by the court, costs and attorney fees. There are several cases where major recoveries have been won by consumers against businesses and persons charged with impermissible access of consumer Credit Reports.
However many Credit Reports have errors. A study revealed 70% of all Credit Reports with at least one inaccuracy. Errors are the result of incorrect merging of information of people with similar names, especially members of the same family, mistakes in the creditor’s reports, mistakes in copying public records like tax lien data, data transcription errors, etc.
TOI or theft of identity is also a cause for inaccurate Credit Reports. This happens when a thief gets hold of some of the consumer’s credit information like social security number, checking account number, credit card number, PIN or other private details. The thief uses this information to apply for credit for instance a credit card in the consumer’s name but with a different address. The issuer then sends the credit card to the address given by the thief. The actual consumer is often unaware of the theft of identity until the creditor or debt collector gets in touch. At this point of time, correcting the theft can be time consuming, not to mention frustrating for all parties involved.
In order to correct the inaccuracies in your Credit Report, write to the Credit Reporting agency (CRA) pointing out the disputed entry, the reasons and a request for the CRA to reinvestigate. It is also a good idea to inform the creditor of the inaccuracy. The CRA has 30 days from the receipt of the request for reinvestigation. If the inaccuracy is not verified as being correct, it has to be deleted from your Credit Report. For instance in case the provider of the disputed information doesn’t respond or is unable to confirm the information, the entry is removed from your Credit Report.
In case of failure to correct the disputed entry, you have the right to sue the CRA for not maintaining reasonable procedures to rectify the situation or sue the supplier of the information for inaccurate reporting of information to the Credit Reporting agency.
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