In our practice of assisting consumers with credit report errors, we come across many misconceptions that
consumers have about their credit reports, and the rights they have. Here are 5 commons ones, and the truths behind them:
1. When I pay my bill off entirely, it will come off my credit report: This is entirely untrue. If the item being paid off was never in a negative status, then the reporting of the account can stay on indefinitely, though typically the credit bureaus remove after ten (10) years. Negative information such as missed payments, late payments, or charge offs, can remain on a credit report for up to seven years from the date of that negative event – regardless of if or when the debt is paid off entirely. The creditor does have to continue to report the account accurately. That is, they cannot leave the account reported as charged off and unpaid with a balance remaining. The creditor can report that it was paid after the charge-off or paid in full, but does not have to delete the previous negative history until that history is seven (7) years in the past.
2. If I did not sign any contract with a company, such as a debt buyer or collector, then they cannot report on my credit: Creditors sell or assign debts for collection all the time. When they do, that collector steps into the shoes of the company from whom they got the debt. They do have the right to collect the debt, and they do have the right to report that the debt is unpaid and/or in collections. Just because a creditor washes their hands of a debt, it does not mean the debt disappears.
3. I can sue a creditor for reporting false information on my credit report: This is kind of true. Yes, you may pursue a creditor in court for reporting inaccurate and/or misleading information about you, however, it is not so straight forward. The right to have a credit report free of errors comes from the Fair Credit Reporting Act (FCRA). The FCRA mandates that a credit report contain “maximum possible accuracy.” If it does not, a consumer does not have an immediate right to address this in court. Under the FCRA a consumer does not have the right to sue a creditor unless and until that consumer has first disputed the debt directly to the credit reporting agencies themselves. The credit reporting agencies must then communicate the dispute directly to the creditor (within 5 days of receiving the dispute) and then report back the results to the consumer with thirty (30) days of receiving the dispute. Then, if the information is not accurate, there may be a right to pursue the creditor. However, this requires two things still (1) that the creditor is in fact guilty of failing to reasonably investigate the account pursuant to the dispute, and (2) that the consumer is damaged by the continued reporting of the account. For information on how to properly dispute a credit report, see our page on disputing your credit report.
4. If I make all of my payments on time, I will have a high credit score: While making all payments on time is the most significant scoring factor, it does not outweigh other important factors that can keep your score down. Payment history makes up for about 35% of your score. However, the amounts of money owed overall is a close second at 30%. This means factors such as how much of your available credit is used and how many accounts that contain balances have a large affect on your score. As such, paying everything on time is great, but your score will still be affected if your credit cards are near their limits and/or there are a lot of accounts open with balances. Also affecting your score, but not quite as much, are the history of credit – how long you have maintained credit, and the types of accounts you have open. Even a high amount of inquiries into one’s credit can affect the score.
5. Disputing my credit report is a waste of time: Sa dly, many people feel that the credit bureaus are too big to fight, and we just have to deal with whatever they report. It’s the wrong way to think. The FCRA provides a dispute mechanism that requires the credit bureaus and the creditors to engage in a reasonable investigation into a dispute. The more information a consumer is willing to give the bureaus about their dispute, the more chance they have at success in their dispute process. If the credit bureaus and the creditors fail to remove information that is inaccurate, the consumer is entitled to recover any damages they have suffered, potentially $1,000 as a statutory damage for any willful or reckless conduct and any attorneys fees and costs incurred in having a lawyer represent the consumer in a case.
If you need assistance making your credit report appear with maximum possible accuracy, contact us for a free case review.