How to fix inaccurate information in a credit report.

You discover an error in your credit report

Folk typically discover errors in their credit reports under two circumstances: when they get turned down for credit or when they review their credit reports. The technique to fix those errors is the same no matter how you discover them. I discuss below what you need to do, actually what you have to do to fix the errors. Credit reporting is governed primarily by the Fair Credit Reporting Act (“FCRA”). The law is tricky and a bit treacherous. Let me demonstrate it with a classic example.

You apply for a car loan and get turned down because your Equifax credit report says that you are grossly delinquent on your mortgage with ABC Bank. In fact, you had refinanced your mortgage with another lender and paid-off ABC Bank. The problem is that ABC Bank’s record-keeping system screwed up and instead of showing your loan as having always been current and now having a $0 balance, it shows it as being late and in default. You are not going to get many good credit deals with that black mark.

You try to fix the problem

So you do what a large percentage of the folk who consult with me on credit reporting errors do: you call ABA Bank to attempt to fix the problem. The nice or perhaps not so nice ABC Bank representatives give you a bit of a run-around. Unsatisfied, you send a letter to ABC Bank explaining the problem. In response, you get a tepid or perhaps a non-sensical letter unresponsive to yours. You try again. This time you send the bank a certified, return receipt requested letter attaching proof that your mortgage is paid off and that it was never late. You get no response from the bank at all. You call back the bank in a last-ditch effort to solve the problem. The customer service representative knows nothing about your letters, and says there is nothing he can do. Fed up, you find a consumer lawyer (hopefully me) and make an appointment to discuss the problem. Come on, you want to sue the bank.

The lawyer will tell you that you have wasted a lot of time. You cannot yet sue. How could this be? You did what any reasonable person would do under the circumstances to fix the problem amicably: complained directly to the entity (ABC Bank) that reported inaccurate information about you to Equifax. The problem is that the FCRA requires that, before you can sue the bank, you have to dispute the inaccurate information with . . . Equifax! This is an unintuitive requirement, but it is the law. Before you can sue the bank, you have to lodge your dispute with the credit bureau.

Let’s get legally “technical” for a moment. The section of the FCRA that allows you to sue the bank for reporting inaccurate information is 15 U.S.C. § 1681 s-2(b). Here is how a recent federal district court explained what it takes to make a claim against the bank; the case is David Bowen, Sr., v. Bank of America, et. al. I added the red emphasis to the quoted text below. Note that a credit bureau is formally known as a “consumer reporting agency” in the FCRA:

“To state a claim under this section, a plaintiff “must allege that (1) [he] sent notice of disputed information to a consumer reporting agency, (2) the consumer reporting agency then notified the defendant furnisher of the dispute, and (3) the furnisher failed to investigate and modify the inaccurate information.” Id. (citing Jamarillo v. Experian Info. Solutions, Inc., 155 F. Supp. 2d 356, 363 (E.D. Pa. 2001)). Here, Plaintiff has not satisfied any of the three requirements under § 1681 s-2(b). He has not alleged that he filed a notice of dispute with any reporting agency, that the agency notified Litton of the dispute, or that Litton thereafter failed to investigate and modify the information. Accordingly, Count II is dismissed for failure to state claim upon which relief can be granted.”

If you don’t dispute with the credit bureau, even though it is the bank that is providing the wrong information, your FCRA case will be readily tossed out of court. Ask Mr. Bowen what happened to his case.

Dispute to the credit bureau

Now that you know what the law requires, do it. You need to dispute the error with Equifax (or likely with the other bureaus, Experian and TransUnion, if the bank misreported you to them also). But, how do I lodge the dispute, you ask? I give you my suggestions in this article.