To dispute credit report errors, send a letter to the credit bureau that generated the report with the inaccuracy and explain what the error is. The bureau generally has up to 35 days to investigate and respond.
“We can’t approve you for the auto loan,” the bank teller told me. “There’s a collection on your credit report from New Mexico Teachers Credit Union.”
“What?!?” I blurted out. “I’ve never even been to New Mexico. That has to be a mistake.”
The Embarrassment of Wrongful Credit Denials
I wanted to hide. This was the lobby of one of those grocery store credit unions near the grocery checkout line — with zero privacy. As shoppers walked by, I imagined them judging me, thinking, “tsk, tsk. Look at that dumb girl who doesn’t pay her bills.”
It was August 2005, I was 27 years old, and had lived in Anchorage, Alaska for less than two months. I was somewhat recovered from the Alaska Bar exam and could finally turn my attention to life’s odds and ends, like getting some used wheels. A coworker’s brother was selling his ten-year-old truck, so he and I went to the local credit union so I could get a small auto loan.
I had some student loans, but I had a job and no credit problems. At least no credit problems of my own. As it turned out, I had someone else’s stuff on my credit report.
Meet the Fair Credit Reporting Act
That was the first time I’d ever had to think about the Fair Credit Reporting Act (“FCRA”), a federal law that protects us consumers in these embarrassing situations. The FCRA has been around for over 40 years and applies to credit reporting agencies (often called “credit bureaus”) such as Equifax, Experian, Trans Union, and creditors whose stuff shows up on credit reports, known as “furnishers” in FCRA world. The credit reporting companies manage gigantic databases containing the credit files of millions of American consumers. When account data comes in from a creditor aka furnisher, the credit reporting agency computers matches those accounts to consumers’ credit files. That’s how accounts show up on your credit report.
My coworker’s brother and I spent the next couple of hours pacing the bank lobby while the bank teller made phone calls to try to get me approved for the loan. As luck would have it, there was someone with a social security number only two digits off from mine who had defaulted on a loan at New Mexico Teachers Credit Union. The banks talked to each other and confirmed the collection account was definitely not mine. I got the truck loan and opened a checking account. A few weeks later I got a form letter from New Mexico Teachers Credit Union confirming that I had never had an account with them. The bogus account disappeared from my credit report. I moved on with life.
Credit Report Errors: Furnisher Errors and Mixed Credit Files
The FCRA requires credit reporting agencies to have reasonable procedures to ensure the maximum possible accuracy of our credit files. Your name, social security number, and geographical location are all factors used to match accounts to consumers. In my situation, I was told that someone had transposed two digits on someone else’s social security number when filling out a form to send information about the defaulted account to the credit reporting agencies, so it was my social security number on the form. And thus, the account that wasn’t mine slipped into my credit file like a party crasher, and was helping itself to the appetizers.
Worse than that are the mixed files. Similar to the 2017 Oscars when Faye Dunaway and Warren Beatty got the wrong envelope and mistakenly announced La La Land instead of Moonlight as Best Picture, sometimes there’s a mix-up backstage. A credit reporting agency might erroneously mix the credit file of one consumer with a different consumer with a similar social security number and same or similar name. This can be devastating if you are the consumer with good credit, and you are mixed with a consumer with bad credit. Many people do not know that they are mixed until they go to buy a car or apply for a mortgage. What’s worse, many people cannot fix a mixed file on the spot the way my problem got fixed on the spot. They are wrongfully turned down for credit faster than they can dispute the false information.
FCRA Dispute and Reinvestigation
Don’t be like I was back in the day. Before you apply for credit, get your credit reports at www.annualcreditreport.com, the best place to get them. The moment you see something on your credit report that is not yours, you need to dispute it. The best way to do this is in writing, via certified mail — not through a credit repair company. Do it yourself instead, and save your mail receipts and copies of your dispute letter. The Federal Trade Commission has clear instructions and a sample dispute letter at its website.
The credit reporting agency has 30 days to conduct a reinvestigation of your dispute. The credit reporting agency should in most situations contact creditors/furnishers who are reporting accounts falsely as belonging to you and must delete anything it can’t verify.
Fortunately, if a consumer is harmed financially or even emotionally by a credit denial based on false credit reporting, s/he can bring a lawsuit to recover for that harm. This is definitely not something that you should do on your own – the FCRA is complex.
If you need help with a mixed credit file or other false stuff on your credit report, talk to a consumer protection lawyer. You can find one in your local area by visiting the National Association of Consumer Advocates website.