Identifying Common Fair Credit Reporting Act Violations: Credit Report Errors and Your Rights Under the FCRA
The Fair Credit Reporting Act (FCRA) is an important federal law designed to regulate the accuracy, privacy, and fairness of credit information. Understanding and exercising your rights under the FCRA is vital for protecting your credit health. This includes identifying common FCRA violations, disputing credit report errors, and taking action if your rights have been infringed.
Understanding Your Credit Report and FCRA Protection
Your credit report is a detailed document that reflects your credit history, including credit card applications, loan payments, bankruptcies, collections, and more. Compiled by the three major credit bureaus—Equifax, Experian, and TransUnion—this information is critical in calculating your credit score and affecting your credit decision for future financial activities. The FCRA governs how consumer reporting agencies, including credit bureaus, manage and share your credit information.
The FCRA protects consumers by ensuring the right to:
- Obtain a free annual credit report from each major credit bureau (each week)
- Dispute and correct inaccurate or incomplete information in your credit report
- Have outdated negative credit information removed, typically after 7 years
- Consent to who can access your credit report or pull your credit for permissible purposes
- Seek damages if a credit bureau or a user of credit information violates the FCRA
Recognizing Common Fair Credit Reporting Act Violations
FCRA violations can detrimentally affect your credit score and privacy. Here are five common violations of the Fair Credit Reporting Act:
- Identity Theft: Failing to block and remove information that is the result of identity theft If you’ve been a victim of identity theft and have reported it to the credit bureaus, they are required to block the fraudulent information from appearing on your credit report. Failure to do so is a violation of the FCRA. The FTC received 1.4 million reports of identity theft in 2020, highlighting the scale of this issue.
- Mixed Files: Reporting information that does not belong to you This often occurs due to mixed files, where information from one consumer’s credit file is mistakenly included in another’s. This can happen when consumers have similar names, addresses, or Social Security numbers. It’s crucial to review your credit report carefully to ensure all information pertains to you.
- Failure to Update: Failing to update your credit information after a dispute has been resolved Once you’ve successfully disputed an item on your credit report, the credit bureau is required to update or remove the information promptly. If they fail to do so, it’s a violation of the FCRA. Always follow up on your disputes to ensure the agreed-upon changes have been made.
- Unauthorized Access: Unauthorized pulls of your credit report, constituting privacy violations Your credit report should only be accessed for permissible purposes, such as when you apply for credit or insurance. If a company pulls your credit report without your permission or a valid reason, it’s a violation of the FCRA. This is why it’s important to review the “hard inquiries” section of your credit report regularly.
- Disputed Debt Reporting: Continuing to report a disputed debt without noting its disputed status When you dispute a debt, the credit bureau must indicate that the debt is disputed on your credit report. If they fail to do this, it’s a violation of the FCRA. This notation is important because it alerts potential creditors that you disagree with the reported information.
Ensure to pull your credit report regularly to check for these errors and inaccuracies. If you spot mistakes, dispute credit report errors promptly to safeguard your financial stability. Remember, a 2021 Consumer Reports study revealed that 34% of Americans found at least one error on their credit reports, showing an increase from a 2012 FTC study which found that 26% of participants identified at least one potentially material error.
It’s also worth noting that the consequences of these violations can be severe. In 2022, the average FCRA lawsuit settlement amount was around $4,800, up from $3,500 in 2018. This underscores the importance of being vigilant about your credit report and understanding your rights under the FCRA.
Dispute Credit Report Errors to Uphold FCRA Compliance
To dispute credit report errors, start by pulling your credit report from all three major credit bureaus. You can do this at annualcreditreport.com. Federal law requires the Big 3 credit bureaus to provide you with your credit report once a year. Since April of 2020 they have been providing it once a week for free. This is only your report, not your credit score, you do not need to pay to get your report and getting your credit score from the bureaus is a waste of your time and money.
Once you have your credit report, review it carefully to look for inaccurate information. Review each section to identify any discrepancies in credit information on an account, account statuses, payment histories, or personal information. Follow the bureaus’ procedure to dispute inaccurate information or report of identity theft. The FCRA mandates that credit bureaus must investigate your disputes and correct any verified inaccuracies.
Once you identify the inaccuracy, you need to mail a letter, certified mail, to the bureaus that are reporting it. Send a detailed letter and make sure they know what is wrong, why it is wrong, and politely ask them to fix it. For more detail see our dispute guide.
Steps to Take if Your Rights for a FCRA Violation
If you find a violation of the FCRA, you may have the grounds for an FCRA lawsuit. If your dispute is unsuccessful, it is time to get an attorney to help with:
- Advise you on your rights under the fair credit reporting act
- Help dispute credit or report errors effectively
- Assist in stopping further violations, such as reporting old or inaccurate credit information
- Consider an FCRA lawsuit to recover damages due to negligent FCRA violations or willful non-compliance
The importance of FCRA compliance has grown significantly over the years. The Consumer Financial Protection Bureau (CFPB) received approximately 319,000 credit reporting complaints in 2021, a dramatic increase from about 54,000 in 2012. This surge in complaints underscores the ongoing challenges in credit reporting accuracy and the critical role of the FCRA in protecting consumers.
Protecting Your Credit with the FCRA
The FCRA is designed to protect your credit report, allowing you to make informed decisions based on accurate credit information. By understanding your rights under the FCRA and actively monitoring your credit file, you can defend against unfair practices and keep your credit in good health. Remember, the FCRA protects you—do not hesitate to exercise your rights to maintain a healthy credit report and ensure you are treated fairly in the consumer credit sphere.
Frequently Asked Questions
Q: What are the common violations of the Fair Credit Reporting Act (FCRA)?
A: Common violations of the FCRA include reporting old or outdated information, using credit report for impermissible purposes, and privacy violations by credit reporting agencies. Identity theft and mixed files are major issues with the credit bureaus. In fact, the FTC received 1.4 million reports of identity theft in 2020, a sharp increase from 650,572 reports in 2019.
Q: What are my rights under the Fair Credit Reporting Act (FCRA)?
A: Your rights under the FCRA include the right to a complete and accurate credit report, obtain a free credit report, the right to dispute inaccurate information on your credit report, and the right to be notified if your credit report is used against you.
Q: What is a violation of the FCRA?
A: A violation of the FCRA can occur when credit reporting agencies fail to follow the guidelines set by the federal Fair Credit Reporting Act, such as reporting information for impermissible purposes or failing to maintain the privacy of consumer credit information.
Q: How can I dispute or report old information on my credit report?
A: You can dispute or report old or outdated information on your credit report by contacting the credit reporting agencies and providing evidence that the information is inaccurate or outdated. Using a letter is the best way to supply your credit dispute to the bureaus.
Q: Can I file an FCRA lawsuit for negligent violations?
A: Yes, if you have been a victim of negligent FCRA violations, you have the right to file a lawsuit against the credit reporting agencies for failing to comply with the FCRA regulations.
Q: How does the FCRA protect my privacy?
A: The FCRA protects your privacy by regulating the use of your credit information and ensuring that it is not used for impermissible purposes that could harm your reputation or financial standing.
Q: Can credit reporting agencies report old or outdated information?
A: Credit reporting agencies are required to ensure that the information they report is accurate and up to date, and reporting old or outdated information can be a violation of the FCRA. If you see old or outdated information you should notify the credit reporting agencies as soon as possible.
Q: What are the consequences of violating the FCRA?
A: Violations of the FCRA can result in legal actions, monetary penalties, and damage to the reputation of credit reporting agencies found to be in violation of the law. In 2020, the Federal Trade Commission (FTC) reported 4,992 complaints specifically about FCRA violations, compared to 3,821 in 2019, indicating an increase in reported violations.
Q: Can I request my credit report for impermissible purposes?
A: No, you are not allowed to request your credit report for impermissible purposes, and doing so can be considered a violation of the FCRA. But when you request your own credit report it is not an impermissible purpose. If the credit card companies use credit information it obtained without your permission, then there could be a case of impermissible access.
Q: How do credit reporting agencies impact my credit scores?
A: Credit reporting agencies play a crucial role in determining your credit scores by reporting information to the three major credit reporting companies, which can affect your credit standing and borrowing abilities. Credit reporting agencies provide your credit history to FICO or Vantage who calculate your score. The information credit bureaus keep is the source of your score, but the bureaus do not actually calculate it.