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September 6, 2013

Credit report disputes — what people need to know

Legal Assistance Office

Imagine being in the market for a new car. You visit a dealership downtown and find the perfect car – low mileage, great condition, all the bells and whistles. You tell the dealer he’s made the sale, but you will need financing.

He pulls your credit score and goes to work. But when he returns to show the rates you qualify for, you are shocked. The interest rates are much higher than anticipated because a company has filed negative information on your credit report. The score is lower than you thought.

If this has happened, you are not alone. The Fort Huachuca Legal Assistance Office staff handles credit report issues on a regular basis. However, people have certain rights when it comes to their credit report.

In 1997, Congress amended the Fair Credit Reporting Act, or FCRA, to add additional safeguards to consumers. The FCRA gives people three rights when it comes to their credit reports – privacy, accuracy and fairness.

First, people have the right to privacy. The FCRA restricts who can access one’s credit report to people who request it with the individual’s permission, business parties in a transaction a person initiates (such as when they visit a car dealership or a mortgage broker, or an employer who might consider hiring an individual).

Second, individuals have the right to accurate credit reports. If there is false information in their credit reports, people have the right to dispute it. But the right to accuracy is a two-edged sword. People can remove false negative information, but creditors have the right to input true negative information.

Accurate negative information will stay on a credit report for seven years, or 10 years in the case of bankruptcy. Be wary of any company that offers a “complete credit report scrub” or that promises to remove bankruptcy, repossessions and foreclosures from a credit report. The services these fly-by-night companies offer usually turn out to be ineffective, at best, and scams, at worst.

Third, a person has the right to fairness. He or she can dispute and remove false negative information from their credit report. While the three credit reporting agencies –Transunion, Equifax and Experian – all allow one to file a dispute online, a person should never use this option.

The online dispute forms give users a very limited space in which to write their dispute, roughly the size of a tweet, and there is no way to add supporting documentation. Instead of submitting an online dispute, write out a letter or memorandum on paper. Then, support the letter with bank statements, credit card records, emails and anything else that will support the argument that the negative information is false. Then, mail it to the credit reporting agency via certified mail with a requested return receipt. Keep a copy of all material sent in as well as the return receipt for record-keeping purposes.

The credit reporting agency then has 30 days to investigate the dispute. If the furnisher – the company or person who provided the negative information – cannot substantiate it, the credit reporting agency has to remove it from the credit report. But if the furnisher can substantiate the negative information, it will stay on the report. At that point, the person listed on the credit report should consult an attorney about available options.

Those with questions about credit reports should visit the Fort Huachuca Legal Assistance Office or call 533.2009. For hours, updates and helpful information, look up the Fort Huachuca Legal Assistance and Claims Office on Facebook.




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