Who has a lawful reason to furnish information to the credit bureaus regarding your credit history?

The Fair Credit Reporting Act (FCRA), found at 15 U.S.C. § 1681, et seq., was originally enacted in 1970.  The express purpose of the FCRA was to require that consumer reporting agencies adopt and implement “reasonable procedures” for ensuring that credit information about a consumer was collected, maintained, and dispensed “in a manner which is fair and equitable to the consumer with regard to the confidentiality, accuracy, relevancy and proper utilization of such information …”  FCRA, 15 U.S.C. §1681(b); Safeco Ins. Co. of Am. v. Burr (2007) 551 U.S. 47, 127 S.Ct. 2201, 2205.  The Congressional findings noted that “[t]here is a need to ensure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and respect for the consumer’s right to privacy.”  FCRA, 15 U.S.C. §1681(a)(4). 

While original creditors, mortgage services, debt collectors may have a legal right to report on your credit report, the key here is that the information they provide must be accurate. And, the credit reporting agencies must engage in reasonable procedures to investigate erroneous entries on your credit report.

Debt buyers, those who buy debt portfolios from original creditors, NEVER have the right to furnish information on your credit report.

 

Furnishing and Reporting Inaccurate Information

Your creditor must not supply information to a CRA that it knows (or should know) is inaccurate. That includes:

  • reporting a debt as charged off when you settled it or paid it in full
  • misstating the balance due
  • reporting late payments when you paid timely
  • listing you as a debtor on an account when you were only the authorized user, or
  • supplying credit information on an account where identity theft was previously reported (or failing to maintain a reasonable procedure for you to report identity theft).

Furnishing and Reporting Old Information

Credit Reporting Agencies and the creditors who supply information to them must provide and keep your credit information current. When your credit circumstances have changed and the information in your credit report is not updated to reflect these changes, this may be a violation of the FCRA. Some examples of this include:

  • failing to report that a debt was discharged in bankruptcy
  • reporting old debts as new or re-aged 
  • reporting an account as active when it was voluntarily closed by a consumer, and 
  • reporting information that is more than seven years old (bankruptcy) or ten years old (civil judgments).

Mixed Files

CRAs can also run afoul of their obligations to report accurate credit information about you. In many instances, this happens when a credit bureau mixes your file with that belonging to someone else with similar background information. Some common cases of mixed files include:

  • morphing or duplicating negative credit information with a stranger who shares a similar social security number
  • failing to distinguish the Jr. and Sr. in similar surnames
  • mixing the information of persons with the same last name and similar first names, and
  • combining or mixing credit files of persons with similar names living in the same city or zip code.

Failing to Follow Debt Dispute Procedures

When you submit a written dispute about the accuracy of an item on your report, credit bureaus and your creditors must take certain actions in response. Their duties include conducting a reasonable investigation of your dispute, correcting any inaccurate information, or even removing the disputed debt from your credit report. There are a number of ways they can fall short of their duties, depending on whether they are the CRA or the creditor.

Debt Dispute Violations by CRAs

Some common violations by a CRA include failing to:

  • notify a creditor that you dispute the debt that it has reported
  • conduct a reasonable investigation of your dispute, or
  • correct or delete any inaccurate, incomplete or unverifiable information within 30 days of the receiving notice of your dispute.

To learn more, see How to Dispute Errors on Your Credit Report.

Debt Dispute Violations by Creditors and Other Information Suppliers

Some common violations by a creditor or other information furnisher include failing to:

  • notify every CRA involved that you dispute the debt
  • submit corrected information to the CRA subsequent to investigating your dispute
  • refrain from continuing to submit information that it knows (or should know) is incorrect
  • conduct an internal investigation of your dispute within 30 days (or 45 days of you supply additional information during the investigation)
  • provide you with a reasonable procedure (including an address) to submit a written dispute or report of identity theft, or
  • inform you of the results of its investigation within 5 business days after it completes the investigation.

To learn more, see How to Dispute Credit Report Items With the Creditor or Collector.

Privacy Violations

CRAs cannot release your credit report to just anybody. They can only give them to authorized persons. CRAs may disclose your report only to persons or entities that have a “valid need,” such as:

  • creditors
  • landlords
  • insurance providers
  • utility companies, and
  • employers (only if you previously consented).

Withholding Notices

You are entitled to notices concerning the reporting, handling, and use of your credit information. Notice violations under the FCRA might occur when:

  • a creditor fails to notify you when it supplies negative credit information to a CRA
  • a “user of credit information” (such as prospective employer or lender) fails to notify you of a negative decision based upon your credit report
  • a creditor fails to provide you with your credit score if it was used as part of any credit decision
  • a creditor fails to notify you of your right to dispute inaccurate credit information
  • a creditor fails to notify you of your right to obtain a free credit report, or
  • a creditor or “user of information” refuses to identify the source of the credit information it obtained about you.

Private Right of Action to Sue Violators

Under these provisions, sections 1681n and 1681o of the FCRA impose liability for willful noncompliance and negligent noncompliance, respectively. In the case of negligent noncompliance, the consumer can recover actual damages, costs, and attorney’s fees. In the case of a willful violation, the consumer can also recover statutory damages between $100 and $1,000, plus punitive damages.