Credit bureaus were established to report accurate information and keep tabs on individuals’ financial trustworthiness in a way that’s fair and appropriate. Unfortunately, credit bureaus sometimes compromise this process by reporting false information, violating rules, or refusing to follow up on error reports.
How can credit bureaus actively hurt your score and what recourse do you have if you experience it yourself?
FCRA and the Value of Hiring an Attorney
First, you should be aware of the Fair Credit Reporting Act (FCRA), a piece of federal legislation designed to protect consumers by ensuring the accuracy, fairness, and privacy of consumer information held and reported by consumer reporting agencies. This law is intended to ensure that all consumers are treated fairly, with accurate and timely information reporting, clear rules for credit bureaus and similar organizations, and opportunities to file disputes for investigation.
You don’t have to understand everything about the FCRA, nor do you have to represent yourself in legal matters. Instead, it’s best to talk to an FCRA attorney if you feel any of your rights have been violated or if your credit report information is not accurate. Your attorney will help you understand your legal rights, your situation, and whether it makes sense to move forward with legal action.
Credit Score Basics
In case you aren’t familiar, your credit score is a numerical measure of your trustworthiness from a financial perspective. Practicing good financial habits, like maintaining a low debt ratio and making your payments on time, can help your credit score increase. Three major credit bureaus are responsible for maintaining information related to your credit and processing credit reports.
There are many things that can fairly hurt your credit score, such as:
- Late payments. Even a single late payment can hurt your credit score. If you make late payments frequently, or if you entirely miss payments, your credit score is going to suffer.
- High debts. Debt is a part of life, at least in American society. Almost everyone has some debt, but the higher your debt is overall, the lower your credit score is going to be.
- Debt applications. Filing many debt applications in quick succession can also hurt your credit score. Individual, occasional debt applications shouldn’t hurt your credit score.
- Closing accounts. If you close a credit account, there’s a chance it could hurt your credit score.
- Stopping credit activities for a long time. If you see small credit activities for an extended period of time, your credit score may decline as well.
How Credit Bureaus Can Hurt Your Credit Score Unfairly
Beyond these, there are several actions that credit bureaus can take to hurt your credit score unfairly. For example:
- Mistakes and inaccurate reporting. Sometimes, credit bureaus report inaccurate information. They may assign a debt to you that doesn’t exist in reality, they may record a late payment that you actually made on time, or they may report completely false information in other categories.
- Obsolete/outdated reporting. It’s also possible for a credit bureau to report outdated or obsolete information. For example, even some types of bankruptcy should disappear from your credit report after seven years; despite this, there’s a chance it could continue showing up years later.
- Failing to investigate a claim. If you do find an error on your credit report, you can dispute it and file an official report. At this juncture, the credit bureau is responsible for investigating the report. If they fail to investigate the claim properly, it could unfairly hurt your credit.
What to Do About Credit Bureau Mistakes and Misconduct
So what should you do about credit bureau mistakes and misconduct?
- Do your due diligence. First, you need to do your due diligence. Investigate the matter to the extent you can and figure out if the report truly contains a mistake.
- Keep records of all communications. From start to finish, do your best to keep records of all communications. If you file an official dispute, keep a record of it. If the credit bureau responds to you, keep a record of that too. Also keep records of any payments, debts, or accounts that are relevant to the matter.
- File an official dispute. Do file an official dispute with the credit bureau to try and resolve the matter quickly. In many cases, this is all it takes to clear up the issue.
- Hire an attorney. If you’re concerned about the unfair treatment or reporting of your credit, consider hiring an attorney to pursue justice.
We trust credit bureaus to report on financial information accurately and fairly, but this doesn’t always happen. Accordingly, you need to be prepared to take action if you ever notice anything askew in your credit report. Fortunately, it’s easier than ever to do it – especially with a lawyer at your side.