How to Dispute Credit Report Errors & When to Sue?

Credit reports are vital to your financial life, affecting everything from loan approvals and interest rates to job applications and rental agreements. Unfortunately, credit reports are known to contain errors that may negatively impact your financial well-being. If you find inaccuracies on your credit report, it is crucial to understand how to dispute them effectively.

As an Ohio consumer protection law firm, Luftman, Heck & Associates is committed to informing individuals about their rights and guiding them through the complexities of credit reporting and debt relief. Our Fair Credit Reporting Act attorneys will explain how to dispute errors on your credit report and when to escalate things to a lawsuit.

Understanding Credit Report Errors

A credit report compiles your credit history, including details about your credit accounts, payment history, and public records such as bankruptcies or judgments.

Credit Reporting Agencies (CRAs) like Equifax, Experian, and TransUnion gather this information from various sources, including creditors, collection agencies, and public records. However, mistakes can occur during data collection, reporting, or input, leading to inaccuracies in your report.

Typical Credit Report Errors

Credit report errors can arise in several ways, each with potentially significant consequences for your financial health. Here are some common errors and how they could occur:

• Incorrect Personal Info: This type of credit reporting error involves mistakes in your name, address, Social Security number, or date of birth. For instance, if your credit report lists an incorrect Social Security number, it could lead to confusion with another person’s credit history, potentially mixing their debts or credit accounts with yours.
• Outdated Information: Negative information that should have been removed from your credit report but still appears can also cause issues. For example, a debt settled years ago might still be listed as active, negatively affecting your credit score and potentially leading to higher interest rates on loans or even credit denial.
• Accounts That Do Not Belong to You: Sometimes, credit reports contain accounts that aren’t yours, often due to identity theft or clerical errors. For example, you might find a credit card account on your report belonging to someone with a similar name, or you could see a loan taken out fraudulently using your identity. These inaccuracies can severely damage your credit score and create legal headaches.
• Incorrect Account Information: Errors in account status, such as showing an account as delinquent or in collections when it is current, can harm your creditworthiness. For instance, an auto loan you’ve been diligently paying might be incorrectly reported as 90 days past due, which could decrease your credit score and affect your ability to get new credit.
• Duplicate Accounts: An account listed multiple times can unfairly lower your credit score by making it seem like you have more debt than you do. For example, a single mortgage could be mistakenly listed twice, doubling your perceived debt amount. This could impact your debt-to-income ratio and lead to credit denial or higher interest rates.

How to Dispute Credit Report Errors

Imagine you recently applied for a mortgage, but the lender informs you that your credit score is lower than expected. Upon reviewing your credit report, you notice an account listed as “in collections” that you have never opened. This account is significantly affecting your credit score and could impact your mortgage application.

Taking prompt action is essential if you identify an error like the one above or any mistake on your credit report. Here are the basics of how to dispute errors on your credit report:

1. Obtain Your Credit Reports

The first step is to obtain a copy of your credit report from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. You are entitled to a free copy from each CRA once every 12 months, which you can request through AnnualCreditReport.com.

2. Review Your Reports Carefully

Examine each credit report thoroughly for inaccuracies, inconsistencies, or outdated information. Pay close attention to every section of your report, including your personal information, account history, and any public records or collections.

3. Gather Supporting Documentation

If you find any errors, collect all supporting documents that validate your claim. This might include account statements, letters from creditors, or any other relevant correspondence that shows the correct information.

4. File a Dispute with the Credit Reporting Agencies

Submit a dispute to each CRA that reported the inaccurate information. You can do this online through their websites, mail, or phone. Your dispute should include:

• A clear identification of the items you are disputing
• An explanation of why the information is inaccurate or incomplete
• Copies (not originals) of any supporting documents
• A request for the removal or correction of the erroneous information

Make sure to keep copies of all correspondence and documentation for your records.

5. The Investigation & Determination

The credit reporting agency is required by law to investigate your dispute, usually within 30 days. They will contact the creditor or the entity that provided the information to verify its accuracy. They must correct or remove the information from your report if they cannot verify the information.

After the investigation, the CRA will provide you with the results in writing and a free copy of your updated credit report if any changes are made. If your dispute is successful, ensure the correction is reflected in all your credit reports.

When to Consider an FCRA Lawsuit

While many disputes are resolved through the dispute process, sometimes credit reporting agencies or creditors fail to correct errors. You may need to consider escalating to legal action and filing a lawsuit when this happens.

Here’s when it may make sense to sue for mistakes on your credit report:

 Unresolved Errors

You may have grounds for a lawsuit if you have disputed inaccurate information with the CRAs and they have failed to correct or remove the errors despite clear evidence. Under the Fair Credit Reporting Act (FCRA), CRAs are obligated to conduct a reasonable investigation of your dispute and correct any errors found. Failure to do so constitutes a violation of your rights.

 Repeated Inaccuracies or Negligence

If the CRA repeatedly reports incorrect information despite your disputes, this could indicate a lack of reasonable procedures to ensure the maximum accuracy of your credit information. Such negligence can provide a basis for legal action under the FCRA.

Tangible Harm Caused by Errors

If the error on your credit report has resulted in tangible harm, such as being denied credit, facing higher interest rates, losing a job opportunity, or suffering damage to your reputation, you may be entitled to compensation. The FCRA allows consumers to sue for actual damages (the real financial losses you’ve suffered), statutory damages (for willful violations), and sometimes punitive damages if the conduct was particularly egregious.

Failure to Investigate Disputes

If a CRA fails to investigate your dispute adequately or does not verify the disputed information with the furnisher (the creditor or entity that provided the data), this could also be grounds for a lawsuit.

What to Expect from an FCRA Lawsuit

Filing a lawsuit under the Fair Credit Reporting Act (FCRA) typically involves holding credit reporting agencies (CRAs) or creditors accountable for failing to maintain accurate information on your credit report or for not adequately addressing your disputes. When you decide to take legal action, the process usually begins with consulting a consumer law attorney with considerable experience and success in FCRA claims.

Your attorney will assess the strength of your case, help you gather necessary evidence, and guide you through filing the lawsuit.

You may be entitled to compensation for actual damages—such as financial losses or emotional distress—statutory damages for willful violations, and even punitive damages in cases of severe misconduct. If you win your case, the court may require the defendant to pay for your attorney’s fees.

The litigation process can vary in length and complexity depending on the specifics of your case and the defendant’s response. Be prepared for a potentially lengthy process, as the defendant may contest the claim or seek to settle out of court. In some cases, mediation or arbitration may be suggested as alternatives, offering a faster and less expensive resolution. Regardless, taking legal action can be a powerful tool to enforce your rights, correct errors on your credit report, and prevent future harm.

Worried About Credit Report Errors in Ohio? Call LHA

Credit report errors can seriously impact your financial health, but you have the right to challenge inaccuracies and ensure your report reflects your true credit history. If you’ve already disputed errors and they remain unresolved, or you just learned of a mistake, it is time to act. An experienced consumer law attorney at Luftman, Heck & Associates can help you navigate the complexities of an FCRA claim, protect your rights, and work towards getting the compensation you deserve.

As a founding partner of Luftman, Heck & Associate, consumer attorney Jeremiah E. Heck is dedicated to helping people manage their financial situations and holding big credit reporting agencies and unscrupulous collection companies accountable.  Contact LHA for a 100% free one-on-one consultation.