FCRA Lawsuits for Negative Info on Your Credit Report

Accurate credit reporting is the foundation of financial health. It influences everything from loan approvals and interest rates to housing and employment opportunities. Unfortunately, credit report errors happen, and when they do, they can have serious consequences.

However, the Fair Credit Reporting Act (FCRA) gives consumers the right to dispute inaccurate information on their credit reports. If the errors persist, you may have grounds to take legal action. This gives individuals a powerful tool to hold credit reporting agencies accountable for mistakes that can harm their financial well-being.

Filing a Lawsuit for an Incorrect Credit Report

If you’ve faced harm due to unresolved or repeated mistakes on your credit report, you may be entitled to compensation and have the right to seek justice through an FCRA lawsuit.

Understand the Reporting Period

Under the FCRA, certain time limits exist for how long negative items can remain on your credit report. Most adverse information, such as late payments, accounts in collections, and judgments, must be removed after seven years. For certain bankruptcies, the reporting period extends to ten years.

These limits are intended to prevent long-term harm from past financial difficulties and allow individuals a fresh start after a reasonable time has passed. Knowing these limits is crucial, as outdated information lingering on your credit report is not just unfair—it’s against the law.

Why Outdated Credit Reports Matter

Lenders, landlords, and employers often use your credit report to assess your reliability and risk. When outdated or inaccurate information remains on your credit report, it can continue to harm your financial life.

Incorrect negative entries can:

• Deny loan applications: Making it more challenging to buy a home or car.
• Increase interest rates: This leads to higher borrowing costs.
• Limit job opportunities: Employers view it as a sign of financial instability.
• Hinder rental applications: Potentially preventing you from securing housing.

Ensuring your credit report is free of outdated information protects your creditworthiness and allows for more financial opportunities.

Errors That Warrant an FCRA Lawsuit

Not all credit report errors lead to legal action, but certain inaccuracies can have severe consequences, potentially warranting an FCRA lawsuit if resolved. Here are some common examples of errors and scenarios that may give rise to a legal claim:

Incorrect Personal Info

Sometimes, credit reports contain errors in personal information, such as your name, address, or Social Security number. While these may seem minor, inaccuracies in personal details can cause your credit report to become mixed up with another person’s file. For instance, if a debt belonging to someone else appears on your report due to a similar name or SSN, it can impact your credit score and borrowing ability. If repeated disputes fail to correct this, legal action may be necessary to resolve the issue.

Outdated Negative Accounts

One of the most frustrating scenarios for consumers is when outdated negative accounts remain on their credit report beyond the allowable reporting period. For example, a settled debt from over seven years ago should no longer be present, but if it still appears and damages your score, it may justify a lawsuit. The FCRA mandates removing outdated information, and a failure to comply with this rule is grounds for legal recourse.

Duplicate Accounts

Sometimes, the same account is reported multiple times, making it appear like more debt than you do. For instance, if a single mortgage or loan account is listed twice, it can inflate your debt-to-income ratio, potentially causing credit denials or higher interest rates. If a credit reporting agency fails to resolve duplicate listings after a dispute, you may have a case for a lawsuit.

Incorrect Account Status

Errors in account status, such as marking an account as delinquent or in collections when it is current, can be damaging. For example, if a fully paid credit card is reported as past due, it can lower your credit score and result in denials for new credit. When repeated disputes fail to correct this error, an FCRA lawsuit may be necessary to hold the credit reporting agency accountable.

Accounts That Don’t Belong to You

One of the most harmful types of credit report errors is the inclusion of accounts that don’t belong to you, often due to identity theft or clerical errors. If a default account appears on your report but does not belong to you, it can severely damage your financial standing. Failure to remove these inaccuracies after disputes may give you grounds to sue for damages caused by the reporting agency’s negligence.

Repeated Reporting Errors

Some consumers find the same errors reappear on their credit reports even after being corrected. For instance, if a debt is reported inaccurately, removed after a dispute, and reappears, it could point to systemic negligence by the CRA or creditor. This cycle of correction and re-reporting can lead to financial harm, and filing an FCRA lawsuit can be an effective way to end the recurring inaccuracies.

Steps to Filing a Credit Report Lawsuit

If you discover errors on your credit report, there are specific steps you should follow before considering a lawsuit. By going through these steps, you’ll give credit reporting agencies and creditors the opportunity to correct the mistakes while also documenting your efforts—a key factor if legal action becomes necessary.

Step 1: Obtain & Review Your Credit Reports

The first step is to get a copy of your credit report from each of the three major credit reporting agencies: Equifax, Experian, and TransUnion. You are entitled to a free report from each agency every 12 months through AnnualCreditReport.com.

Please carefully review these reports for inaccuracies, outdated information, or unfamiliar accounts. Minor errors can impact your credit score.

Step 2: Gather Evidence of the Error

Once you’ve identified an error, gather any documents that support your case. This could include account statements, letters from creditors, or proof of payments.

For example, if an account is listed as delinquent but was paid in full, documentation showing the payment can serve as critical evidence. Accurate records will strengthen your case and provide proof if the dispute escalates.

Step 3: Dispute the Error

File a dispute directly with the credit reporting agencies that listed the inaccurate information. You can do this online, by phone, or via mail. Your dispute should include:

• A clear identification of the items you’re disputing
• An explanation of why the information is inaccurate or outdated
• Copies (not originals) of supporting documentation

Once you’ve submitted your dispute, the agency is required by law to investigate, usually within 30 days, and contact the creditor for verification. If the CRA finds the information inaccurate, it must correct or remove it.

Failure to Investigate Disputes

Under the FCRA, credit reporting agencies have a duty to conduct a reasonable investigation when a consumer disputes an item on their credit report. However, if an agency fails to verify disputed information with the furnisher (such as a creditor) or ignores evidence provided by the consumer, it may indicate a lack of compliance. In cases where the CRA repeatedly disregards valid disputes, legal action may be the only way to enforce your rights.

Step 4: Document All Communication

After filing your dispute, follow up to ensure it’s handled correctly, and document all communication with the credit reporting agency. This can include dates of phone calls, copies of emails, and any letters sent or received.

Keep a detailed record of these interactions if you must demonstrate your efforts to correct the error.

When is Legal Action Necessary?

If the credit reporting agencies or creditors fail to correct the inaccuracies despite your dispute, you may have grounds to file a lawsuit under the FCRA.

A lawsuit for a credit reporting error may be appropriate if:

• The error remains unresolved after a reasonable investigation period
• The same inaccuracies reappear on your credit report even after correction
• You have suffered financial harm or emotional distress due to the error

The Outcomes of Credit Report Lawsuits

Filing a lawsuit under the Fair Credit Reporting Act (FCRA) can lead to various outcomes. The primary goal is to correct your credit report and secure compensation for any harm caused.

• Correcting Credit Report Errors: The most direct result of a successful FCRA lawsuit is correcting or removing inaccurate information from your credit report, restoring your creditworthiness and financial opportunities.
• Financial Compensation: You may be entitled to monetary compensation if the errors caused financial or emotional harm. This can include actual damages for specific losses (like denied credit or job opportunities), statutory damages of up to $1,000 per willful violation, and, in extreme cases, punitive damages.
• Attorney Fees & Legal Costs: Winning an FCRA lawsuit may also result in the CRA or creditor covering your attorney’s fees, making the legal process more accessible to consumers.
• Alternative Dispute Resolution & Settlements: Not all cases reach court. Many FCRA cases are resolved through settlements or mediation, where the CRA or creditor agrees to correct errors and potentially offer compensation without a trial. These alternatives often provide a faster, less costly resolution.

How Long Does an FCRA Lawsuit Take?

The length of an FCRA lawsuit varies, often taking months to a year. Many cases are settled or resolved through mediation, saving time and reducing stress. An experienced attorney will manage communications, evidence gathering, and negotiations, giving you the best chance at a favorable outcome.

A Lawyer Can Help with Your FCRA Lawsuit

Navigating an FCRA lawsuit can be complex, but a consumer law attorney can guide you. An experienced attorney can help gather the necessary evidence, file your claim, and advocate for your rights in court. With a skilled lawyer, you stand a stronger chance of receiving the compensation you deserve and ensuring the inaccuracies are finally removed from your report.

Don’t Handle Credit Report Errors Alone. Call LHA

Credit report errors can have a major impact on your financial life. The Fair Credit Reporting Act is on your side if you’ve tried to dispute inaccuracies, haven’t seen results, or just discovered mistakes. This law allows you to demand corrections and seek compensation for any harm done.

Luftman, Heck & Associates is here to help. Our experienced Ohio consumer law attorneys are dedicated to protecting the rights of Ohio residents. We’ll guide you through the complexities of an FCRA claim and fight to get you the financial relief you deserve. Founding partner Jeremiah Heck is committed to holding credit reporting agencies and unfair collection companies accountable.

Contact LHA for a free consultation to discuss your credit report issues and explore your options for a successful resolution.