What federal law already requires, and what to do when it is ignored

The accuracy standard

A consumer reporting agency must follow reasonable procedures to assure maximum possible accuracy of the information it reports about you. That phrase does more work than it appears to. It does not merely prohibit publishing false statements. It requires the agency to have procedures in place, before any dispute arrives, designed to keep the file accurate. Courts have found that reporting technically true information in a misleading way can violate the standard, because a report that creates a false impression of your credit history is not accurate in the sense the statute intends.

The right to dispute and the reinvestigation duty

When you dispute the completeness or accuracy of an item, the agency must conduct a reasonable reinvestigation, generally within thirty days, and must forward all relevant information you provided to the furnisher of the disputed data. The word that matters is reasonable. Passing a coded summary through an automated exchange and accepting whatever comes back is, in many circumstances, not a reasonable investigation, particularly where the consumer supplied documents that the agency never transmitted.

If information cannot be verified, it must be deleted or modified. If the reinvestigation results in a change, the agency must furnish written notice of the results within five business days and, on your request, send corrected reports to anyone who received the inaccurate version in the recent past.

The method of verification

After a reinvestigation, you may request a description of the procedure used to determine the accuracy of the item, including the business contacted and its name, address, and, where reasonably available, telephone number. This is one of the most useful and least used rights in the statute. The response frequently reveals that no meaningful investigation took place, which is precisely the evidence needed for the next step.

Duties of the companies that report about you

Furnishers, meaning the lenders, servicers, debt buyers, and collection agencies that send data to the bureaus, have their own obligations. They may not report information they know or have reasonable cause to believe is inaccurate. Once notified of a dispute by a bureau, they must investigate, review the information provided, and report the results back. If the information is found to be incomplete or inaccurate, they must correct it with every bureau to which they reported. A furnisher that has been given documented notice of an error and continues to report it anyway is in a materially different position than one making a first time mistake.

Reporting time limits

Most negative information may be reported for seven years. For a Chapter 7 bankruptcy the period is ten years from the filing date. The seven year clock for a delinquent account runs from the date of first delinquency that led to the collection or charge off, and it does not restart when the debt is sold, when a payment is made, or when a collector opens a new account entry. Resetting that date, known as re-aging, is a violation and one we find regularly by comparing the same debt across all three reports.

Permissible purpose

Your report may be obtained only for purposes the statute allows, which include a credit transaction you initiated, account review by an existing creditor, employment screening with your written authorization, insurance underwriting, and certain legitimate business needs. A company that pulls your file without one of those purposes has violated the act regardless of whether the pull affected your score.

Reinsertion of deleted information

An item deleted after a dispute may not simply reappear. If it is reinserted, the furnisher must certify that the information is complete and accurate, and the agency must notify you in writing within five business days of the reinsertion, including the contact information for the furnisher. Silent reinsertion is a violation and, because it follows a prior deletion, it is difficult for the agency to characterize as an innocent error.

Identity theft protections

A consumer who submits an identity theft report may require the bureaus to block information resulting from the theft, generally within four business days. You may place a one year fraud alert, an extended seven year alert with an identity theft report, or a security freeze at no cost. You are also entitled to obtain from the creditor the application and transaction records associated with the fraudulent account, which is often the fastest way to end the dispute, since a creditor that cannot produce a signed application has little to defend.

Debt collection rules that intersect with credit reporting

The Fair Debt Collection Practices Act adds a second layer where a third party collector is involved. You may demand validation of the debt, and collection activity must pause until validation is provided. A collector may not misrepresent the amount or legal status of a debt, threaten action it does not intend or is not permitted to take, contact you at inconvenient times, or continue contacting you after written notice to stop. Reporting a debt to the bureaus is itself a form of collection activity, which is why validation disputes and reporting disputes are usually pursued together.

What the law provides when these duties are breached

For a negligent violation, a consumer may recover actual damages together with attorney fees and costs. Actual damages include quantifiable losses such as a higher interest rate, a denied application, or a lost opportunity, and in appropriate cases emotional distress and reputational harm. For a willful violation, the consumer may recover actual damages or statutory damages between one hundred and one thousand dollars, and punitive damages may be available. Because the statute shifts fees to the defendant, a consumer with a real claim can pursue it without paying hourly legal fees out of pocket.

Time limits on your claims

A claim under the Fair Credit Reporting Act generally must be brought within two years of the date you discovered the violation, and in no event more than five years after the violation occurred. Claims under the Fair Debt Collection Practices Act generally carry a one year period. Deadlines are unforgiving, and evidence deteriorates faster than the deadlines do, so a file that has been sitting is worth reviewing sooner rather than later.

What the law does not do

Nothing in the statute allows the removal of accurate, current, verifiable information. There is no provision that erases a legitimate late payment, and no letter template that changes that. What the law does is guarantee that the record about you is correct and that someone answers for it when it is not. In our experience that is a far larger category than most people expect once all three reports are examined closely.