The Fair Credit Reporting Act (“FCRA”) is a federal law that regulates credit reporting agencies. The FCRA compels these agencies to ensure that their reporting results in a fair and accurate summary of a consumer's credit history and was authored to protect consumers from damaging misinformation.

Knowing Your Rights

Maintaining a strong credit history is key to obtaining competitive interest rates on auto loans, mortgages, and other consumer purchases. Negative information on a credit report will lower a consumer’s credit score, resulting in higher interest rates on loans and credit cards. It may also impact your ability to secure a loan, rent an apartment, secure insurance, or establish utility services. In some cases it may even affect your ability to secure employment.

It goes without saying that people are human and make mistakes, including the occasional missed payment. But what if the negative information on your credit report isn’t true or accurate? Do you, as a consumer, have any recourse?

The answer is “yes”, but only if the Fair Credit Reporting Act is followed carefully.

Contacting the Reporting Agencies

All consumers are entitled to one free credit report every 12 months, upon request from each nationwide credit bureau. For additional information visit www.ftc.gov/credit.

In the event of a credit reporting error, each credit reporting agency has its own mechanism allowing the consumer to “dispute” the alleged error. These mechanisms may prove worthwhile. Sometimes, however, they are perfunctory and provide little or no resolution.

Consumers also have the option of contacting the entity that provided the inaccurate data to the reporting agency. For example, if the credit report erroneously lists late mortgage payments to “ABC Bank”, then the consumer can contact ABC Bank directly and ask them to fix the error. Again, such efforts do not always result in correction sought.

Sending the Letter

In some circumstances, a consumer may need to sue for proper remedy. The FCRA requires that, prior to suing the lender and/or the credit reporting agency, the consumer must send a written request for “reinvestigation” of disputed items to the credit reporting agency. This letter acts as a “last chance” notice, giving both the creditor and the credit reporting agency one last opportunity to fix their mistake. Sending a certified letter is very important. Without it, there is simply no claim under the FCRA against the creditor. Once the letter is received by the reporting agency, both the agency and the creditor may be held liable if the dispute is not addressed.

The FCRA can be tricky. The challenge process can be time-consuming and intimidating. If your credit has been damaged by a reporting error, you may consider contacting an attorney who is familiar with the FCRA process. A knowledgeable consumer attorney can draft the dispute letter for you to sign while guiding you through the dispute process. Such legal assistance may prove invaluable in your effort to set the record straight.