Credit Reporting Law
Fair Credit Reporting Act/California Consumer Reporting Agencies Act
The Fair Credit Reporting Act (FCRA) requires that credit reporting agencies (i.e. Trans Union, Equifax, and Experian) report only true and accurate information. Banks, credit card companies, prospective employers, and landlords all have the ability to review your credit report. Therefore, if you have noticed incorrect information on your reports please contact us. An inaccurate credit report can prevent you from obtaining the loan, employment position, or home you are seeking.
California has similar law commonly referred to as the CCRAA. This law also prohibits furnishers from providing inaccurate information to credit reporting agencies. These laws are to promote the accuracy, fairness, and privacy of your personal information.
What can I do if there is a mistake on my credit report?
First, you should always begin by reviewing a copy of your credit report to ensure the accuracy of your information. If you notice inaccurate information in regards to your report, make a list of everything that is incorrect including your name, address, Social Security number, and list of accounts. Next, with our assistance we can prepare a dispute letter to send to the furnisher of the information, and/or the credit reporting agencies to notify them of the inaccurate information.
If the credit reporting agencies verify the information to be inaccurate, the bureaus must remove the information from your report. However, if they continue to report the inaccurate information we may be able to file a lawsuit on your behalf.
Do my unpaid or delinquent accounts get removed after a certain period of time?
Yes. The Fair Credit Reporting Act prohibits credit reporting agencies from reporting negative information regarding suits and judgments on a consumer’s report after seven (7) years. This can include collection accounts, charge-offs, and repossessions. If you believe a credit reporting agency is reporting an account that has exceeded 7 years, contact our office to submit a dispute to the credit reporting agencies.
Can a Credit Reporting Agency reinsert previously deleted information on my credit report?
Yes, so long as certain conditions are met. The federal Fair Credit Reporting Act identifies the requirements relating to reinsertion of previously deleted material.
In order to reinsert the previously deleted information, the furnisher (most often the creditor) of the information must first certify that the information is complete and accurate. Otherwise, the material may not be reinserted. (See 15 U.S.C. § 1681i(a)(5)(B)(i).)
Second, notice must be provided to you. “If any information that has been deleted from a consumer’s file … is reinserted in the file, the consumer reporting agency shall notify the consumer of the reinsertion in writing not later than 5 business days after the reinsertion or, if authorized by the consumer for that purpose, by any other means available to the agency.” (See 15 U.S.C. § 1681i(a)(5)(B)(ii).)
“As part of, or in addition to the notice…, a consumer reporting agency shall provide to a consumer in writing not later than 5 business days after the date of the reinsertion—
(I) a statement that the disputed information has been reinserted;
(II) the business name and address of any furnisher of information contacted and the telephone number of such furnisher, if reasonably available, or of any furnisher of information that contacted the consumer reporting agency, in connection with the reinsertion of such information; and
(III) a notice that the consumer has the right to add a statement to the consumer’s file disputing the accuracy or completeness of the disputed information.” (See 15 U.S.C. § 1681i(a)(5)(B)(iii).)
The FCRA further provides procedures to prevent reappearance. “A consumer reporting agency shall maintain reasonable procedures designed to prevent the reappearance in a consumer’s file, and in consumer reports on the consumer, of information that is deleted pursuant to this paragraph (other than information that is reinserted in accordance with subparagraph (B)(i)).” (15 U.S. Code § 1681i(a)(5)(C).)
Failure to comply with these requirements may result in a violation of the FCRA; if so, you may have the right to sue the reporting agency providing the wrongfully reinserted information.
Can a mortgage company report a balance owed following the foreclosure of my home?
Not in California if the lender foreclosed outside the courts, also known as a “non-judicial” foreclosure. Most foreclosures in California are “non-judicial,” meaning they occur outside the court system. Lenders must comply with California’s requirements regarding recording and serving a Notice of Default and Notice of Trustee’s Sale prior to holding the foreclosure auction.
This Ninth Circuit Court of Appeals (the federal appellate court circuit that California is a part of) recently addressed this specific issue in Kuns v. Ocwen Loan Servicing, LLC, No. 13-55562, 2015 WL 2405422 (9th Cir. May 21, 2015) where a purchase money loan was foreclosed on. Like many individuals foreclosed on, Mr. Kuns had “no personal liability for the deficiency that resulted from the foreclosure sale. Cal. Code Civ. Proc. §§ 580b, 580d.”(Kuns at *1.)
Thanks to California’s anti-deficiency statute, the Ninth Circuit Court was able to establish that the lender could not seek the difference in the amount of the loan foreclosed on and the amount received from foreclosure sale. In Kuns, the mortgage servicer was reporting the deficiency as an amount being owed by Mr. Kuns.
The Ninth Circuit Court ultimately found that Mr. Kuns had a viable claim for the lender’s alleged violation of California’s Consumer Credit Reporting Agencies Act (“CCRAA”) since the lender was reporting “incomplete or inaccurate” regarding his personal liability for the foreclosure. The Kuns court further noted that the “anti-deficiency laws’ protection against post-foreclosure personal liability is complete and nonwaivable.” (Kuns at *1.)
Lenders thus cannot report a balance due following a non-judicial foreclosure. If you find yourself in this situation, you may have a case against the lender for violating credit reporting laws.