More about Errors on Your Credit Report
Credit scores have a profound impact on our lives. It controls our access to money, and what we pay to use money (interest rates and fees). As credit scoring systems began to rapidly grow in the 1960's with the advent of computers and their ability to store and share information, the United States Congress passed laws in 1970 to protect you from mistakes and abuses. Known as the Fair Credit Reporting Act or "FCRA," these laws are designed to protect you (a) from other people's access to this information, and (b) your right and ability to request corrections and deletions from mistakes on your reports.
The FCRA not only requires that credit reporting agencies (Experian, Equifax and Transunion) to perform a reasonable reinvestigation but also make corrections in a timely manner.
Unfortunately, credit reporting agencies do not always perform their roles properly. Furnishers (creditors and debt collectors) can also fail to conduct a proper reinvestigation.
Here are three common types of errors occur within a person's credit reports:
1. Identity theft. When someone steals your identity, they begin stealing your credit obligation of repaying anything. This can cause great harm to your credit score if left uncorrected. (The laws that provided more identity theft protection were passed in 2003, known as the Fair and Accurate Credit Transaction Act or "FACTA," and is an amendment to the FCRA).
2. Mixed information. People who share common names, or relatives, often have negative items put on their credit report that correctly belongs to another person. The result is the same to your score as if someone had stolen your identity, and should be corrected upon request.
3. Mislabeled items. Sometimes an item that should appear on your credit report shows up but is labeled incorrectly. For example, a home that was turned in to the lender should say, "Deed in Lieu of Foreclosure," but instead it says, "Foreclosure." Or perhaps you paid off a debt and it should say "Paid in Full" but instead it says "Delinquent."
An important key to all of these mistakes is that neither the furnisher of the information nor the credit report agencies are obligated to re-investigate the possible error until you attempt to seek correction. If you seek correction and proper corrective action is not taken, then a violation of the FCRA may have occurred.
To read more about these laws, go here.
To read the law, go here.