A consumer’s credit history plays a more important role in their life than they might know. Not only does a credit report affect a consumer’s ability to open a credit card or take out a loan — it can also affect their ability to buy a home or car or even get a job or rent an apartment. As a result, errors in credit reporting can unfortunately be massively detrimental to the consumer.
Protecting consumers from credit report errors
The Fair Credit Reporting Act (FCRA) is a law that was designed to protect the “accuracy, fairness, and privacy” of the information in consumer credit bureau files.
“The FCRA allows consumers several important rights when it comes to their credit,” explains Daniel Cohen, Founding Partner at Consumer Attorneys. “This includes informing you when your credit file is used against you in a decision, giving you access to your credit report, restricting others’ access to your credit report, allowing you to dispute inaccurate information on your credit report, and permitting you to place a freeze on your credit report.”
These protections afforded by the FCRA are important because the mistakes they protect against have the potential to harshly affect consumers. Lawyers, such as the team at Consumer Attorneys, help consumers who have been wronged by the credit bureaus take advantage of the provisions of the FCRA to help them repair their credit and remediate any negative results.
How credit report errors hurt consumers
Many consumers could find that there are simply inaccuracies in their credit reports. According to the Consumer Financial Protection Bureau, some common inaccuracies include closed accounts being reported as open, authorized users being reported as owners of accounts, accounts being incorrectly reported as late or delinquent, listing of incorrect balances or credit limits, and the same debt being listed more than once. These errors can all have massive impacts on a consumer’s credit history, even though the fault lies with the reporting agency.
Some errors, such as incorrectly reported dates of payments, can be caused by decreased reporting on credit reports. Although credit reporting typically happens on a monthly basis — if not more frequently — should a lender fail to report a payment to the agencies in a timely manner, this could have a massive ripple effect on one’s credit score.
Sometimes, there are even instances where credit files are mixed. A person could have incidents on their credit report or background check that were from a completely different person, whether it be due to similar names, name changes — such as a discrepancy between a married and maiden name — or simple negligence with data entry errors on the part of the reporting agency. In these cases, a consumer’s credit is being negatively affected for something they didn’t even do.
Instances of identity theft can also be detrimental to a consumer’s credit. When a fraudster steals a consumer’s identity and uses it to make purchases and credit inquiries, these events are still reported as if they were conducted by the consumer themself. Although steps can be taken to remedy the negative effects of identity theft, it’s a long and complicated process. Thus, protections afforded by the FCRA — such as disputes and credit freezes — are important in protecting consumers and minimizing the negative impact of wrongdoing.
For example, if mistakes are made on a background check, this could result in a consumer being denied an employment opportunity. “We’ve seen instances where reports have included information on the wrong person, included sealed or expunged records, reported incomplete information, displayed data in misleading ways, or even misclassified the type of offense,” says Cohen. “Beyond preventing you from taking advantage of a given opportunity, these errors can also ruin your professional and personal reputation.”
Similarly, mistakes made in tenant screenings can be detrimental to a consumer’s future. “Say a consumer reporting agency falsely says that an individual did not pay off a loan — a landlord could deny their application,” Cohen explains. “If a mistake like this is made, work with a lawyer to ensure the misrepresentation is corrected and that you receive the compensation you deserve.”
Unfortunately, in the credit reporting industry, things are all too often skewed against the consumer. The Fair Credit Reporting Act is a massive step in the right direction to protecting consumers’ rights when it comes to their credit reports.
“These credit reporting errors are due to no fault of the consumer’s own, yet they can have massive consequences, from preventing the purchase of new cars or homes to stopping them from getting a new job,” says Cohen. “Lawyers like us stand up for the rights of our clients and help protect them from inaccurate and fraudulent reports on their credit.”
