Disputing an Error on Your Credit Report Under the FCRA

A single wrong entry on a credit report can raise your interest rate, cost you an apartment, or end a job application. Errors are also common and stubborn: a late payment that wasn't late, an account that belongs to someone with a similar name, a debt that was paid off and still shows a balance.

The Fair Credit Reporting Act, 15 U.S.C. § 1681 and following, gives you a formal way to force a correction. It also lets you sue when the companies involved don't do their part.

Two kinds of companies, two sets of duties

The FCRA regulates consumer reporting agencies, which include the three national credit bureaus (Equifax, Experian, and TransUnion) as well as specialty agencies that produce tenant screening and background reports. The bureaus must follow reasonable procedures to assure maximum possible accuracy of the information they report. See § 1681e(b).

It also regulates furnishers, meaning the banks, lenders, and collectors that send information about you to the bureaus. Their duties are in § 1681s-2.

How the dispute process works

Start by getting your reports. Under 15 U.S.C. § 1681j you're entitled to free reports from each national bureau, available through annualcreditreport.com, and the bureaus have made them available weekly. Check all three. Because the bureaus don't share data with each other, an error can appear on one report and not the others.

When you notify a bureau that you dispute something in your file, § 1681i requires it to conduct a reasonable reinvestigation and finish within thirty days. That can stretch to forty-five days if you send additional relevant information during the first thirty. Within five business days of receiving your dispute, the bureau has to forward it, with all the relevant information you provided, to the furnisher. If the item turns out to be inaccurate, incomplete, or can't be verified, the bureau must delete or correct it, and it must send you the results in writing within five business days after it finishes.

Once the furnisher gets your dispute from the bureau, § 1681s-2(b) requires it to investigate, review everything the bureau sent, report back, and correct or delete what it can't verify.

Most litigation turns on the word "reasonable." A bureau that sends the furnisher a short code and accepts whatever comes back, without looking at the documents you supplied, may not have conducted a reasonable reinvestigation. The same goes for a furnisher that simply checks its own database and confirms the entry that was wrong in the first place.

Why you should dispute through the bureaus

You can send a dispute straight to the lender or collector, and CFPB regulations require furnishers to investigate certain direct disputes. But there's a practical catch. The FCRA's private right of action against a furnisher is tied to the duties in § 1681s-2(b), which are triggered when the furnisher receives notice of the dispute from a credit bureau. If you only dispute directly with the furnisher, you may not have preserved a claim against it. Disputing with the bureaus is the step that matters.

Making your dispute count

Put it in writing and mail it. Online dispute portals are convenient, but they tend to reduce your dispute to a checkbox, and a letter creates a better record. Identify the exact account and the exact error, say what the correct information is, and attach whatever supports you: payment confirmations, statements, a letter from the creditor, or an identity theft report. Send a separate dispute to each bureau reporting the error, by certified mail, and keep copies of everything.

If the error survives

The FCRA has two damages provisions. For willful violations, § 1681n allows actual damages or statutory damages between $100 and $1,000, plus punitive damages and attorney's fees. The Supreme Court held in Safeco Insurance Co. of America v. Burr (2007) that "willful" covers reckless disregard of the statute, not just knowing violations. For negligent violations, § 1681o allows actual damages and attorney's fees.

Actual damages can include higher interest costs, denied credit, time spent fixing the problem, and emotional distress from being turned down because of a report that was wrong.

Under § 1681p, you must sue within two years after discovering the violation, and no later than five years after it occurred.