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For individuals in California, there are two laws that can assist you if incorrect information is reported on your credit file. The Fair Credit Reporting Act, 15 U.S.C. §1681 et seq. (“FCRA”) and the California Consumer Credit Reporting Agencies Act, Civil Code §1785.1 et seq. (“CCRAA”) both prohibit unlawful credit reporting.
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 a 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.
Credit bureaus have reports compiled for approximately 200 million people. A government study by the FTC estimated that 40 million people are likely to have an error on their credit report. Put another way that is about 1 in 5 people with an error. It is estimated that about 10 million people have errors that are so severe it is causing them to overpay on credit cards, mortgages, and loans.
The errors occur in a number of different ways. We have seen accounts that have been paid off continuing to be shown as open, especially in collections. In one case we had a single mother who had to move because the house she rented had plumbing problems, rodents, no heat (they used space heaters), electrical problems, mold and caused breathing problems for her child. An old hospital bill she had previously paid off was being reported by a debt collector. She disputed it multiple times. She even paid for it a second time.
We also have had clients who have paid their mortgages but when the loan is transferred to a new entity the new servicer does not update their records and correctly process the payment. Victims of identity theft often have accounts they did not open appear on their credit file.
Negative information can also only be reported for seven years. We have had many cases where information is reported past the seven-year mark. 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.
More recently we are seeing people who have been in a modification and making payments being reported as in default.
This is actually more difficult than you would think. We represented a grandmother who wanted to purchase a house to move and be closer to her grandchildren. She had co-signed on a car loan for her daughter and the car was totaled and the balance remaining on the loan was charged off. She settled the account but it kept being reported as an open account. There was a glitch in the finance company’s system – they would do a manual request to delete but the automatic monthly update would put it back on. This went on for over a year. She could not buy the house.
Here are some tips to follow when submitting disputes. First, do the dispute in writing. Although phone disputes are permitted it is nice to have a paper trail. Next, send the dispute via certified mail return receipt. You should include any documents that support your dispute. If the information is not corrected after your dispute you should contact a lawyer. You should send the dispute not only to the credit bureau but also to the credit furnisher. Be sure to keep a copy of your dispute. By law, the credit bureaus have 30 days to investigate and correct the reporting. They will send you a copy of their results. Save any correspondence you receive from the credit bureaus.
The following video explains steps you can take to protect your credit report.
A credit bureau must enable a consumer to establish a “freeze,” prohibiting the credit bureau from giving the report to anyone without the consumer’s consent. California Civil Code §§ 1785.11.2 (effective Jan. 1, 2003). Effective January 1, 2004, a credit reporting agency cannot charge more than $10.00 to place or remove the freeze, or $12.00 to temporarily lift the freeze. California Civil Code § 1785.11.2(m), SB 602.
You can also place a fraud alert on your credit report which will provide notice to any prospective creditors that they must contact you before credit is opened in your name. This is a good tool to protect against unauthorized accounts being opened in your name.
Increasingly employers are checking individuals’ credit reports before giving them a job. In one case we had an employee who was applying for a job to be a truck driver. When the company ran a background check there were a number of DUIs on his record. The only problem was he had never been arrested. The credit bureau had mixed up his file with another person. Unfortunately, he did not get the job but we were able to bring suit to clear up his name and get him compensation.
Renters who are looking for apartments also have their credit pulled. This can be very difficult for individuals if they cannot find a place to live because there is inaccurate information on their credit report.
If any of these things have happened to you because of your credit report please contact our Chula Vista & San Diego, CA Consumer Right Protection firm. We provide a free consultation. We can be reached at 619-476-0030.