Can You Sue for False Credit Reporting?

Credit reports are one of the most important things in a consumer’s financial life. They determine a person’s creditworthiness and have a direct impact on an individual’s ability to obtain credit cards, secure loans, mortgages, employment, and even a place to live. 

Despite credit bureaus’ drive to maintain accurate records, mistakes can and do happen. In some situations, these inaccuracies or errors can lead to a false credit report, which can inflict substantial damage on an individual’s credit score.

What can you do, if you discover that you are a victim of false credit reporting? Is it possible to sue the parties responsible, and if so, can you also seek compensation for damages that were caused by the reporting? The answer, to all of these questions, is yes, under certain circumstances of course. 

We’re going to dig into the concept of false credit reporting, how the Fair Credit Reporting Act figures in, and when you may be able to sue about it. We’ll also discuss what steps you should take before filing your lawsuit, to give it the best chance of winning, and how Fair Credit can help you navigate the entire, complex process.

The Concept of False Credit Reporting

False credit reporting refers to the presence of inaccurate, erroneous, or misleading information on a consumer credit report. This misinformation can lead to significant negative effects on their credit as well as their overall financial reputation and credit score. This can make it difficult or even impossible to obtain credit products, get a loan, be offered favorable terms and rates, or even pass background checks for employment and housing.

Several factors can cause or simply contribute to false credit reporting, such as:

• Human Error

Mistakes can easily happen during clerical or data entry processes, or when merging customer information. This can result in incorrect payment histories, incorrect personal data, or wrong credit limits being reported. 

• Outdated Information

Credit reports need to be constantly updated to reflect current information about balances, account statuses, and payment timeliness. Sometimes, however, old information isn’t updated or is reported longer than permitted, which can make your report far less accurate.

• Mixed Files

While a rare error, sometimes consumer names, information, and files are similar enough that they become merged. This leads to one person having a credit history of two people’s credits.

• Fraud & Identity Theft

When a fraudster uses someone else’s personal information to open credit accounts, take out loans, or make other financial decisions or applications in their name. This can create false information on their credit report, lowering their score in many cases.

• Reporting Errors By Furnishers

Credit reporting agencies are only useful because they have massive amounts of the information reported to them by “furnishers of information” or entities that report on your financial activity to the bureaus. Lenders, creditors, and similar furnishers of information can make mistakes that lead to inaccuracies on your credit report. 

Legal Rights Under the Fair Credit Reporting Act (FCRA)

The Fair Credit Reporting Act, FCRA, is a federal law enacted in 1970 that governs the use, collection, and dissemination of the information contained in consumer credit files. The FCRA creates several rights and protections for consumers. These rights and protections include:

• Credit Report Access

Consumers have the right to get a free copy of their credit report from each of the 3 main agencies, every 12 months.

• Right to Dispute Inaccuracies

Consumers that find inaccurate information on their credit reports have the right to dispute that information with the credit bureau and the furnisher of the information. All parties involved must investigate and correct any errors within a specific time frame. 

• Right to Place a Fraud Alert or Security Freeze

Consumers who suspect they are a victim of identity theft have the right to place a fraud alert or security freeze on their credit report to prevent unauthorized access and further damage.

• Right to Seek Damages

Consumers have the right to sue furnishers of information and credit agencies for FCRA violations, which can lead to monetary damages and even compensation for the harm caused by the false reporting.

Steps to Take If You Suspect False Credit Reporting

If you suspect that you’re the victim of false credit reporting, it’s essential to act fast to minimize the damage and correct the inaccuracies. Here are some steps to follow to give you the best chance of protecting your credit score and financial well-being. 

Requesting Your Credit Report

The first thing you’ll need to do is get informed, and that means getting a copy of your credit report from each of the 3 bureaus, Equifax, Experian, and TransUnion. Consumers can use the official AnnualCreditReport.com site, or they can use popular credit monitoring apps like CreditKarma. Once you have your reports, you’ll need to review them in depth, looking for any unauthorized or inaccurate information.

Disputing the Inaccurate Items

For each error, type, or inaccuracy you find, you’ll need to go through the dispute process with the credit bureau that is listing it on your report. This can generally be done either by mail, by phone, or online. For your dispute to be effective, you’ll need to include any pertinent information related to the error or credit report item. 

This can include identity documents, account statements, balance records, or payment history records. Once the bureau receives the dispute, they will generally have 30 days to investigate it. 

Filing a Complaint With The Consumer Financial Protection Bureau (CFPB)

If you don’t get a resolution through the standard dispute process, you may need to escalate the issue. The CFPB is the federal government agency that is tasked with helping enforce consumer credit laws and regulations. You can call them or use their online form to submit a formal complaint, after which they will review it, forward it to the appropriate party, and work to get a reply from them. 

Consult With An Attorney

If you’re unsure what to do next and you feel like you don’t have any options you haven’t already tried, it may be time to reach out to a credit attorney. 

Can You Sue for False Credit Reporting?

If you have exhausted all other avenues to have your credit inaccuracies fixed, and still haven’t gotten a resolution, you may be able to initiate legal action to get the solution you need.

Your Legal Grounds

Under the FCRA, you are guaranteed the right to sue a party that has violated your rights or protections under the act. If a credit bureau or furnisher is continually reporting false information, despite your efforts to dispute the information, you may have grounds for a lawsuit. However, before you start any litigation, you should make an effort to gather all the evidence you need to support your claim. 

Potential Damages

If you and your attorney decide that a lawsuit is a good idea, 4 potential damage types may be awarded. 

• Actual damages are damages that you suffer as a direct result of credit damage, like a denied loan or higher rates on a credit card.
• Statutory damages of between $100 and $1,000 per violation.
• Punitive damages to punish a defendant in a particularly egregious case.
• Attorney’s fees and costs are usually awarded to the winning party.

Trust Fair Credit To Help You Win Your False Credit Reporting Lawsuit

If you believe that you may have a case for false credit reporting, but aren’t sure where to start, Fair Credit may be able to help. Our team of experienced attorneys has extensive experience with credit lawsuits and FCRA violations. Reach out to Fair Credit today to discuss the details of your case in a confidential environment.