How to Identify Fair Credit Reporting Act Violations
The Fair Credit Reporting Act was established in 1970, creating rights for consumers on how their personal information is used and distributed. It’s important to understand these rights to ensure your clients can qualify with a healthy credit profile.
I highly recommend that you save a copy of the FCRA summary provided by the FTC. Here is the link.
When you or a client is reviewing a credit report keep a close eye out for the following:
Outdated Information: Furnishers (those providing data to the credit bureaus) must submit accurate and complete information about the consumer. For example, if a collection is reporting with a Date of Last Activity that is outside of the Statutes of Limitations, then the collection would be in violation and should be investigated or disputed with the credit bureaus.
Incomplete Information: This is the most common of FCRA violations on credit reports. Incomplete accounts lower credit scores without giving full details of the status on the account. For example, if you have a charge-off account that is missing key reporting factors such as the date opened, date of last activity, or the balance, then that account should be investigated or disputed to be fixed.
Inaccurate Information: Unfortunately, one in four consumers have at least one material error on credit. In addition, one in five at one material error that is negatively impacting their credit scores. Inaccurate information is becoming more prevalent due to merged data files, identity theft, and poor reporting standards with collection agencies and debt collectors.
The most important advice that we give out to both clients and our referring partners is to be vigilant if you see derogatory information on a credit report. Be sure to review the credit report in detail keeping an eye out for outdated, incomplete, or inaccurate information. It’s also important to understand that disputing is not a magic wand and cannot make accurate information just disappear. If you feel like you or your client needs to dispute an item on credit then check out these resources.
DIY: The CFPB provides free information on how to dispute an account with the credit bureaus. Learn more here.
Responsible Disputing w/ Premier Credit: We offer a responsible approach to removing FCRA violations while helping to build a healthy credit profile. Learn more about our services here.