Credit Reporting: Do You Know Your Rights?

If you've ever been turned down for a credit card then you've probably received this nice letter in the mail;

Dear Consumer

Thank you for applying for a credit account with SO and SO Finance Company. After carefully reviewing your application, we are sorry to advise you that we cannot open an account for you at this time.

"Our credit decision was based in whole or in part on information obtained from the consumer reporting agencies listed below. You have a right under the Fair Credit Reporting Act to know the information contained in your credit file at the consumer reporting agencies. The reporting agencies played no part in our decision and are unable to supply specific reasons why we have denied credit to you. You also have the right to a free copy of your report from the reporting agencies, if you request it no later than 60 days after you receive this notice. In addition, if you find that any information contained in the report you receive is inaccurate or incomplete, you have the right to dispute the matter with the reporting agencies. We have received credit information from: Equifax Credit Reporting Agency"

Sincerely,

The highlighted paragraph in quotations is mandated by the Fair Credit Reporting Act (FCRA) of 1970, and that paragraph should appear, nearly word for word, in every credit denial letter you ever get.

The FCRA was established, among a host of reasons, to provide consumers with a way to make credit reporting agencies accountable for the information they compile and sell on each and every one of us.

Credit reporting agencies are NOT government agencies. They ARE profitable corporations, controlled and regulated by this important legislation, and they make their money selling your credit file to anybody who requests, and pays for one.

Credit reports are used to determine your credit worthiness, car insurance rates, interest rates, etc. Credit reporting agencies also compile and report public information i.e.; bankruptcies, tax liens, judgments, collections, bounced checks, etc.

All of this information as well as any reporting, closed and current credit accounts, payment history, open balances, monthly payment, any credit inquiries, current and prior addresses, current and prior employment, any alias' or surnames ever used, is contained in your credit report.

Any incorrect or fraudulent information is there as well.

You are responsible for bringing these mistakes or frauds to their attention. Credit reporting agencies are competitive and do not share information with each other. One report could be very different from another. If you do find items that you wish to dispute you must do so with each of the three agencies. You have the right, under the FCRA, to dispute any information reported by these agencies.

Under the FCRA, credit reporting agencies have a legal duty to correct or confirm any and all of this information and data, and in a timely manner.

Before you dispute anything, you should know your rights under the FCRA.

They are:

• The right to have your dispute investigated; The bureaus must investigate your dispute, usually within 30 days, by contacting the creditor, collection agency, or any other "information provider" that supplied the data in question. Any information provider contacted in this way must launch its own investigation and report its results back to the bureau.

There is a major exception to the 30-day rule however. If the credit bureaus decide that your dispute is "frivolous" they can tell you so, and refuse to investigate. This tends to happen if you repeatedly demand investigations of information that has already been verified. It is best to dispute each account separately and wait a time before disputing accounts that have been previously investigated and verified.

• The right to have the erroneous information corrected; If the provider says the information is indeed inaccurate, it is required to notify not just the bureau that originally contacted it, but all the other major credit bureaus as well, so that the error can be fixed or the item deleted. If the provider can't verify the information, the information must be deleted from your credit report
  
• The bureaus can, however, reinsert deleted information or undo the correction down the road if the provider later verifies that the original item was, in fact, complete and correct.
  
• The right to a written response; after completing its investigation, the bureau must give you a written report of its findings and, if the investigation changed anything on your file, a free copy of your credit report.

Furthermore, if the bureau later restores any information that was deleted and/or changed, it must notify you in writing and provide you with the name, address, and phone number of the information provider.

• The right to have a statement included in your file; If the dispute isn't resolved to your satisfaction, you are entitled to have up to a 100 word statement inserted into your credit report explaining your side of the story. These statements, however, have no effect on your credit score.
  
• The right to sue; If a creditor or collection agency violates these rights -- by continuing to report inaccurate, unsubstantiated information, for example or failing to respond to your dispute -- you can sue the creditor or agency in state or federal court.

When it comes to collections, you have another important right as outlined in the Fair Debt Collection Practices Act: (FDCPA)

• The right to have a collection account validated; this process, as outlined in the FDCPA, is quite different from the "verification"
  process referred to above.

When a credit bureau asks a creditor to "verify" information, the investigation that follows can be pretty cursory.


The creditor reviews its records and any information supplied by the consumer and then decides whether it, the creditor, was right or wrong.

When a collection agency is asked to validate a debt, by contrast, the process can get pretty involved. The collector must prove that the debt is your responsibility, and also that they have the legal right to collect it from you.

Furthermore, the collector has to cease all collection activity until they provide this evidence to you.

If the agency can't validate the debt, it must end its attempts to collect on the debt and stop reporting the collections account to the credit bureaus.

To validate a debt, the collector must present documentation, obtained from the original creditor, proving that you do indeed owe the money.

Eventually, erroneous and false information will be deleted and even some correctly reporting negative credit information might be deleted as well. You might lose positive information as well.