Today I am featuring a guest post from an exceptional attorney and consumer rights advocate Dennis McCarty, who also happens to be my husband.
Dennis’ practice exclusively focuses on the representation of consumers, especially those with credit report errors. He has litigated over 200 consumer law cases for the victims of illegal debt collection practices from debt collectors, pursuant to the Federal Fair Debt Collection Practices Act (FDCPA) and inaccurate credit reporting, pursuant to the Federal Fair Credit Reporting Act (FCRA).
Inaccurate Reporting Is An Epidemic
It isn’t news to anyone that errors run rampant within the credit reporting industry. The latest government figures state that one in five consumers have errors on their report. This means that potentially 40 million consumers have inaccurate credit reports.
There are three nationwide credit reporting agencies, Experian, TransUnion and Equifax. Anytime a consumer fills out an application for a loan or credit, the credit grantor will pull their credit report from one or sometimes from all three credit reporting agencies. Sometimes what they find is a mystery, not to mention as fictional as the most current sci-fi novel.
How Your Credit Report Is Created
The credit reporting agencies put your credit report together from information that it receives from third parties, called data furnishers. The data furnishers comprise of credit cards, home mortgages, car loans, lines of credit and everyone’s friend, the third party debt collector.
The problem is that your credit profile, which is so critical in either you receiving or being denied a loan, is in the hands of individuals that have their own self serving purposes for reporting the credit data. Generally, each and every month, the data furnishers will update the credit reporting agencies as to each of your accounts. They will report that you either paid timely or that you missed a payment. As stated, many times the data furnisher reports erroneous information. It’s important to address these errors since they could hurt your ability to borrow money.
Obtaining A Copy of Your Credit Report After Denial
After a consumer gets denied credit, the denying credit grantor will most likely refuse to give you a copy of the credit report that they viewed. Instead, they will inform you that you will receive a letter in the mail informing you that you were denied.
The letter will instruct you to request a copy of your credit report on your own, leaving you with an empty feeling of helplessness. It never ceases to amaze me how the system makes so it difficult to view your very own personal and confidential credit information.
However, the government did step in and require the three nationwide credit reporting agencies to provide one free credit report per year at www.annualcreditreport.com. That sounds like a step in the right direction, but in order to receive one, the security questions asked are so difficult and/or confusing, that even though it is your own information and history, it is easier to get at least one of a series of questions wrong than it is to get them correct.
At that point, the request will be denied and your on-line experience will be over. The only alternative will be to call and attempt to correct the mistake by verifying your identity, which is almost an act of congress within itself.
Even if you are able to obtain the free credit report, it will only show you the accounts that are being reported. It will not show you your credit score. You can purchase a credit report directly from the reporting agency that will come with a credit score, but it isn’t the score that approximately 90% of the credit grantors use. They use a FICO score. I often refer my clients to go to www.myfico.com, where they can purchase a credit report with FICO scoring.
Common Errors on Credit Reports
1. Incorrect information
Make sure your name is spelled correctly and the right middle initial is used. If this is incorrect, there could be information on your report from another person with a similar name. Also review your address, employment information and Social Security number. And of course, make sure the credit data being reported is accurate.
2. Accounts listed as closed by lender
If you closed a credit account, make sure that your report does not list it as “closed by grantor.” This means that the lender closed the account, not you, and can have a negative effect on your creditworthiness.
3. Bad debts older than 7 years
After seven years, credit reporting companies are supposed to remove bad debts from your report. If you’ve ever filed for bankruptcy, discharged debts also should not be on your report, though the bankruptcy will be.
4. Duplicate accounts
Oftentimes accounts are reported more than once and this will make it look like you have more open credit and higher debt.
5. Debts from an ex-spouse
If you’re getting divorced, take your name off any joint accounts so you won’t be liable for future debts. Also, check your credit report after you’re divorced to make sure no new debts from your ex are added to your record.
How To Dispute Inaccurate Information On Your Credit Report
Once you have received your credit report and you have identified errors, the next step is to dispute it. The Fair Credit Reporting Act requires that a dispute be sent directly to the credit reporting agency that is reporting the inaccurate data.
Steps for disputing an account
- Send a written dispute letter to the credit reporting agencies. Always send your correspondence via certified mail, with a return receipt requested, and keep a copy of your signed, dated letter for your records.
- Include your name, social security number, date of birth and address.
- Identify the inaccurate account with account number.
- Explain in a simple, easy to follow narrative on how or why the account is an error. The dispute does not have to be technical but it is important to give the reporting agency enough information to identify the error and the instruction to either correct it or delete it, depending on the circumstance of the account.
- Tell the credit reporting agency if you are being prevented from obtaining credit, such as a mortgage, credit card, or auto loan, or if you are being harmed in other ways.
- Enclose documentation, such as police reports, correspondence with your creditors, and any additional information documentation you have.
Click here to download a sample dispute letter (includes addresses for Experian, TransUnion and Equifax).
Additionally, You can also dispute it directly with the entity that reported the account, but under the Fair Credit Reporting Act, the only way to have any recourse against both the credit reporting agency and the data furnisher is to dispute it directly to the reporting bureau.
What Happens Next
When the reporting agency receives the dispute, they forward a computerized data form, along with a copy of the dispute letter, to the entity that reported the account. The data furnisher has thirty (30) days to complete the “investigation”. Once the data furnisher completes the investigation, they return the computerized dispute form back to the reporting agency and then you are notified of the investigation results.
Stay tuned for my next post. I’ll cover the steps a consumer will need to take if the reporting bureau and data furnisher do not correct or delete the inaccurate information.
Dennis McCarty is a consumer advocate and founding member of McCarty and Raburn. He earned his J.D. from the South Texas College of Law and has been a member of the Mississippi State Bar since 2008. Dennis is admitted into the United States Court of Appeals for the Fifth Circuit and most notably the Supreme Court of the United States. He is also admitted into all federal district courts in Texas and Mississippi.
Dennis’ practice exclusively focuses on the representation of consumers, especially those with credit report errors. He has been principally involved in over 200 consumer law cases for the victims of illegal debt collection practices from debt collectors, pursuant to the Federal Fair Debt Collection Practices Act (FDCPA) and inaccurate credit reporting, pursuant to the Federal Fair Credit Reporting Act (FCRA).
The majority of Dennis’ cases (over 200) settle before reaching trial. Settlements vary according to violations and the specific damages of the case. His settlements include: *
Client with a FCRA violation by Credit Reporting Agencies – $275,000
Client with a FCRA violation by Credit Reporting Agencies and Creditor – $145,000
Client with a FCRA violation by Credit Reporting Agencies and Creditor – $79,000
Client with a FCRA violation by Credit Reporting Agencies and Creditor – $96,000
Client with a FCRA violation by Credit Reporting Agencies and Creditor – $58,000
Trial Result Highlights
In 2016, Dennis obtained a $190,000 verdict against JP Morgan Chase Bank for violations of the Fair Credit Reporting Act.
In 2011, Dennis obtained a $20,000 verdict against Santander for violating the Fair Credit Reporting Act and successfully defended the verdict in oral argument at the Fifth Circuit of Appeals in 2012.
*Verdicts not intended to be representative.