Category Archives: FAQ

Frequently asked questions when dealing with inaccurate credit reports, identity theft, and employment credit reports

How does a credit reporting agency create my credit file?

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Credit reporting agencies create a consumer credit file when banks, credit card companies, collection agencies, etc. (“furnishers” as defined by the Fair Credit Reporting Act) provide credit information about their experiences with a consumer.  These experiences can be credit inquiries, on-time payments, late payments, or charge-offs.  Furnishers typically provide this information to the credit reporting agencies in the industry standard Metro 2 Format.

The Metro 2 Format is an electronic mechanism so that credit reporting agencies have a standardized system to receive and report credit data in electronic form.  As part of the format, credit information such as account type, account status, account balance, and account history is converted into Metro 2 codes that can be associated and reported with the identifying information for an individual consumer.  The organization and maintenance of this information results in what the consumer refers to as their respective “credit file.”  Conceptually the credit data information maintained on a consumer is more like data in a cloud that can result in a different credit file for a consumer depending upon the information input in the inquiry process as part of a credit application.  Most consumers are surprised to learn that credit reporting agencies do not keep copies of the credit reports that are issued when a consumer applies for credit.  The credit reporting agencies use matching algorithms that are programmed to place certain information in specific places and provide a credit report.  These reports are organic in the sense that the information reported can change depending on the time and circumstances.  When a credit reporting agency receives Metro 2 data from a new furnisher regarding a consumer, the credit reporting agency attempts to match that new information with the best possible match of credit data already in possession of the credit reporting agency.

Credit report errors of mismatched or mixed credit information occur when the data received by the credit reporting agency is associated with the file of a different consumer.  Mixed credit information can be the result of the incomplete or inaccurate information being associated with the wrong consumer.  For example, a furnisher could transpose the social security number digits on an account that would result in the information being associated with the wrong consumer.  Similar names or similar social security numbers for individuals that live at the same addresses can cause data to be mixed inaccurately and lead to a credit report error.  The end result can be catastrophic if the inaccurate credit information is placed on a consumer’s credit report just as the consumer needs to use their credit to obtain a mortgage or buy a car.

When a credit report error happens, the consumer should dispute the inaccurate information immediately with the credit reporting agency.  Please see my previous post with helpful information on how a consumer can dispute inaccurate information on their credit report.  If you would like to speak to me about inaccurate information in your credit report or a credit report error about an employment related credit report, please contact my office at (703) 390-2905.

How a settled charged off debt should report on your credit report.

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When a consumer pays in full a charged off account the balance should credit report as zero with the appropriate status code, “Paid/closed-was a charge-off.”  If the consumer does not pay the full balance after a charge-off as part of a settlement, the account status code credit reported is “Paid in full for less than the full balance.” 

The credit reporting errors that our office sees most frequently related to paid charge-offs happens when the furnisher continues to report a balance after the consumer has made the settlement payment on the account.  The furnisher will continue to report an amount in the balance status even though it has accepted a settlement payment.  Credit report errors of this nature are particularly  frustrating because the credit report continues to report the past due balance as owed when the consumer has paid and settled the debt.  Consumers are contacting our offices looking for a Northern Virginia credit report lawyer who can assist them in having a settled charged off debt report correctly on their consumer credit report. If you have a credit report error, you should contact me at my office in Reston, Virginia at 571-313-0412.

Consumers often encounter a financial set back, which results in credit cards and loans being charged-off by the original creditor or a bankruptcy.  After an account is charged-off with a past due balance owed, consumers may wish to settle the debt for less than full balance owed as a means of beginning to rebuild their credit and credit file. If you are going to settle a past debt with a creditor or debt collector, I would recommend getting the terms of the settlement in writing prior to making any payments, so the obligations of the parties are clear.  Many creditors will not agree to delete derogatory items from your credit file as part of a settlement, but  they do have an obligation to report the debt accurately on your credit file after you make the settlement payment.  Based upon generally accepted credit reporting guidelines authored by the Consumer Data Industry Association, when an account is paid in full for less than the total amount owed, the creditor should report the current and past due balance as zero with a special notation that the account was paid in full for less than full balance.

Paid charge-off accounts credit reporting inaccurately are similar in nature to inaccuracies related to bankrupt accounts previously discussed.  While previous charge off accounts and bankruptcies are bad credit events in the past, the passage of time allows the consumer to rebuild their credit profile.  When credit report errors persist,  the consumer can never receive the fresh start to their credit that they have earned and should hire an attorney to assist them to recover damages for an inaccurate credit file.

 

How should my accounts credit report after filing bankruptcy?

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The type of bankruptcy filed, the status of the bankruptcy proceeding, and whether the debt has been discharged determines how credit reporting agencies report accounts after bankruptcy filing.

Furnishers of information credit report the bankruptcy status of an account to the credit reporting agencies as part of the consumer information indicator field in the Metro 2 data sent to the credit reporting agencies.  As for a Chapter 7 bankruptcy, for the month that the Chapter 7 bankruptcy is filed, the furnisher should report in the consumer information indicator field that a Petition for Chapter 7 bankruptcy has been filed.  For the time period between the filing of the Chapter 7 bankruptcy and the discharge, the furnisher should continue to report the same consumer information indicator to report that the account was included as part of the bankruptcy.  After the debt is discharged in the Chapter 7 bankruptcy, the furnisher should update the consumer information indicator field to indicate that the debt has been discharged which will assist the credit reporting agencies so that they do not report an inaccurate past due balance or derogatory status after a bankruptcy.

Equifax, Experian, and TransUnion have also agreed to implement procedures to make sure that debts discharged in bankruptcy do not continue to report derogatory balances or a past due status.  Experian notes that accounts included in bankruptcy will not be deleted from a credit report but that does not mean that a credit reporting agency can report inaccurate information with incorrect past due balances about an account that was discharged in bankruptcy.  While the filing of a bankruptcy is obviously an extremely negative event for a credit report, the purpose of the bankruptcy is to provide a new start so that a consumer can reestablish a credit profile.  Reporting inaccurate credit information about accounts included in bankruptcy can cause significant hardship to a consumer trying to reestablish their credit after bankruptcy.  If you need to obtain a copy of your credit report after bankruptcy to review how the credit reporting agencies note the accounts after bankruptcy, please see my previous post on how to obtain a copy of your credit file.  If you know that you have inaccurate information on your credit report after a bankruptcy discharge, you can dispute the inaccurate information with the credit reporting agency as described here.  If you need any additional information or have any questions, please contact my office at 703-390-9205 to discuss the inaccurate information on your credit report.

How do I get a free copy of my credit report?

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The fastest way to get a free copy of your credit report is to obtain the report through www.annualcreditreport.com.  You may also obtain a free copy of your credit report by calling 1-877-322-8228, or through the mail by  completing  the Annual Credit Report Request Form and mailing it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281.  The Federal Trade Commission also has a short video on free credit reports that you can review as well.

The FCRA requires certain credit reporting agencies to provide you with one free copy of your credit report per year. The important thing to remember is the correct website to visit in order to obtain your free credit report. The website is:

www.annualcreditreport.com

When you visit the website, you will need to know basic details about your financial life in order to answer security questions. Initially, you will enter obvious items like your name, address, and social security number.  As you enter a specific credit reporting agency website, you will answer more difficult questions about your financial history to verify your identity.  Examples include prior street address names and numbers, monthly payment amounts for certain debts, and maybe even the names of prior roommates.

You do not need to purchase anything to obtain a free copy of your credit report.  You may be solicited for optional items like credit scores and credit monitoring, but you need not purchase anything in order to see your free credit report.

Because their are three main credit reporting agencies, I like to review one free report every four months by staggering the individual reports that I obtain for free.  A good reference point is near your birthday with scheduled reminders to get another free report four months later.  By viewing credit reports in this fashion, you are getting periodic snapshots to make sure that no new inaccuracies are on any credit report.

I would print off and maintain in your records the copies of the reports that you obtain.  This creates a baseline snapshot of your credit file if you are ever the victim of inaccurate credit reporting, identity theft, a mixed credit file, merged credit file, or multiple credit files.  Monitoring the contents of your credit file is important in protecting your future.  Do not delay, get a free copy of your credit report today.

 

How do I dispute inaccurate Equifax, Trans Union, or Experian credit reports?

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Mail a written credit dispute letter along with supporting documentation to the credit reporting agency that reports the inaccurate information.  The letter should include your identifying information (name, date of birth, social security number) , an identification of the inaccurate information, a description why the information is inaccurate, and any documents that support why the information reported is inaccurate.  If you wish to discuss your letter before mailing it to the credit reporting agency, please call me at 703-390-2905. 

The reason you want to send this is information is related to the provisions of the Fair Credit Reporting Act (FCRA).  Under the FCRA, a consumer must initiate the dispute of an inaccurate credit report directly through a credit reporting agency (CRA) in order to trigger the liability provisions of the act. This means that you must send your credit report dispute letter including documents related to your dispute to the credit reporting agency (typically Equifax, Trans Union, and Experian). You may also want to provide a copy of the dispute to the furnisher of the incorrect information, but providing the information directly to the furnisher will not trigger your right to file a lawsuit.  After the CRA receives the dispute, it has a duty to send a notice of the dispute to the furnisher of the information.  Under the FCRA, both a CRA and a furnisher have a duty to conduct a “reasonable investigation” of the information that you have disputed.  Because reasonableness can often be in the eye of the beholder, certain information will increase the chances that an investigation of your credit report dispute will be resolved in your favor.

First, a good dispute letter should clearly identify your name, address, social security number, and date of birth.  By providing this information, you reduce the chance that the CRA can claim that they could not locate your credit information in their data base.

Second, you should clearly identify the account(s) that you are disputing as well as describe the facts supporting your position why the credit reporting is incorrect.  Often times a CRA can claim that they do not want to resolve disputes between you and a third party furrnisher.  To minimize this argument, you can identify the facts that demonstrate why your position is clearly correct and reference as many documents as necessary to demonstrate why the information reported is inaccurate.  You should also include the supporting documentation as part of your dispute package. Letters, invoices, and/or contracts involving the furnisher of disputed information can make for good proof of your argument.  In the event that you are a victim of identity theft, you should also include an identity theft affidavit, police report, and/or identification of the police report number with the investigating officer named.  For information about dealing with the affects of identity theft, please review this post on what to do if you are an identity theft victim.

Third, include a statement that describes how the inaccurate credit reporting is hurting you and request that the CRA take immediate action to solve your problem.  Whether that means correcting an inaccurate account, deleting a judgment that is not yours, or removing a false criminal conviction from an inaccurate employment credit report, you should request that the CRA stop reporting the inaccurate information.  If you have lost a job because of an inaccurate employment credit report or lost a mortgage because of an inaccurate credit report, I would tell the CRA the details in the dispute letter.

Finally, I recommend that you personally sign your letter, make a copy of the signed letter including the attachments for your records, and mail the letter via both first class mail and certified mail return receipt requested.  The Federal Trade Commission also publishes information that you can consult when disputing inaccurate information which is located at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.pdf.  If you ever have any questions, you can also contact me.