The Fair Credit Reporting Act regulates what personal credit information can be collected, stored and distributed about an individual. When you apply for a credit card, car loan or mortgage, the lender will review your credit report and score to make a determination about your account. If the information included in your report is incorrect then you could be declined – through no fault of your own. The credit reporting agencies, creditors and debt collectors are required to furnish correct information about your accounts, and to remove items that are not correct or verifiable.
The U.S. has three main credit reporting agencies: TransUnion, Equifax and Experian. If you have ever purchased a home, had a car loan, credit card or other loan, then you will have information on file with each of these agencies. As part of the FCRA, you are entitled to a free copy of your report from each agency once a year; you are also entitled to a free copy if you have applied for credit and been turned down. Checking your credit report at least every few months is the ideal way to make sure that both the reporting agencies and your creditors are following the FCRA; you’ll discover mistakes and violations quickly if you are familiar with your report’s contents.
Credit reports contain information that can impact you positively or negatively; the positives should generally be left alone. Negative points can include late or missed payments, judgments, defaulted accounts and accounts placed by debt collectors. Under the FCRA, you have the right to ask for validation of any debt, and to dispute items that are not correct.
If you spot a debt that is listed incorrectly on your report, you have the right to request validation for that debt. The reporting agency must furnish you with the name and contact information for the entity reporting the item. Once you have this information, you can send a letter asking for specific information about the debt. The company that has placed the item on your report is required to provide you with proof of the debt, or remove the item. Simply having your name and address is not proof of a debt; many low-end debt collectors attempt to collect fees from people who do not owe money at all. Placing a questionable item on your report may be a way of getting you to pay – even though you don’t owe the money at all. The FCRA protects consumers from this type of shady practice.
Under FCRA rules, if an entity or debt collector is unable to verify or prove the information within 30 days of your request to do so, the item in question must be removed from your report. The debt collector may not do this on their own; you may have to write to the credit reporting agency and assert your FCRA rights. Send a copy of your request, along with any response, to the credit reporting agency in question. If you know a debt is invalid, and the credit reporting agency will not remove it, consider turning the matter over to your credit lawyers to compel the agency to comply with the FCRA.