Nearly everyone understands that having good credit is important.  Lenders make decisions related to whether they will give a loan and what the terms of a loan will be, in large part, based upon the prospective borrower’s credit rating.  Employers increasingly analyze the credit histories of applicants when making hiring decisions.  In addition, recent studies have been conducted that have shown that it is becoming more common for people to consider a credit score as a factor in determining whether to get married to a prospective spouse.

With all of these important implications hanging in the balance, it seems prudent to make sure that your credit is the best that it can be.  In that regard, the federal Fair Credit Reporting Act (FCRA) is a powerful tool that enables optimal creditworthiness.  The FCRA exists to ensure fair and accurate credit reporting, promote efficiency in the banking system and protect consumer privacy.  It is designed to prevent “furnishers of information” (basically, creditors) from spreading inaccurate consumer-credit information.  

Under the FCRA, furnishers have a duty to provide the Credit Reporting Agencies (“CRA’s”) (TransUnion, Experian and Equifax) with accurate information about their consumers.  Later, a furnisher may be asked by a CRA to respond to disputes about the consumer information provided.  If at some point a CRA discovers that either the “completeness or accuracy” of a consumer’s information is in dispute—and provided that it does not determine the dispute to be “frivolous or irrelevant”—that CRA will then notify the original furnisher and provide it with “all relevant information regarding the dispute.”  

Upon receiving notice of a dispute from a CRA, a furnisher faces the following duties:

 (A) conduct an investigation with respect to the disputed information;

(B) review all relevant information provided by the CRA;

(C) report the results of the investigation to the CRA;

(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other CRAs to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and

(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete, or cannot be verified after any reinvestigation, for purposes of reporting to a CRA only, as appropriate, based on the results of the reinvestigation promptly—

(i) modify that item of information;

(ii) delete that item of information; or

(iii) permanently block the reporting of that item of information.

If a furnisher of information violates these provisions of the FCRA, a consumer has the right to sue the furnisher in court.  In addition to having a court compel the furnisher to correct the consumer’s credit report, a court can order the furnisher to pay damages, including actual damages, punitive damages and attorney fees.  The first step to ensuring that your credit report is accurate is to obtain a copy of your report.  You have the legal right to obtain one free copy of your credit report per year.  It is a good idea to review your report with an attorney who understands the FCRA and who can help you get the dispute process started in the event that you find inaccurate items on your credit report. 

— Kassem Dakhlallah is a partner with Jaafar & Mahdi Law Group, P.C.  His practice focuses on complex litigation including class actions, representative actions, commercial litigation, civil forfeiture and personal injury. He can be reached at (313) 846-6400 and kassem@jaafarandmahdi.com.