How to File a False Credit Reporting Lawsuit

Last Updated:
May 5, 2023

Your credit report is critical to your life and holds the information that determines whether or not you’re able to get loans, credit cards, and more. It governs every aspect of your financial life, and can even be used in housing and employment deliberations. The impact of false information on your credit report can be intensely detrimental. 

We’re going to look at the process of identifying and addressing false credit reporting, up to and including filing a lawsuit to protect your rights if needed. 

Understanding False Credit Reporting

To best understand false credit reporting, you should understand how the errors in credit reports occur in the first place, as well as what the consequences are of those false reports. 

Common Errors in Credit Reports

The most common errors that occur in credit reports include:

  • Incorrect personal information like name, address, social security number, etc.: This is generally the result of data entry mistakes or getting mixed up with someone with a similar name.
  • Inaccurate credit accounts information like balance, payment history, and credit limit: Payment history or balance inaccuracies can happen when lenders or creditors report inaccurate information to credit bureaus.
  • Duplicate accounts or double reporting: Sometimes accounts are listed multiple times on your report, often because the debt was sold or transferred, and one agency neglected to stop reporting it.
  • Fraudulent accounts or the results of identity theft: If identity theft occurs and an account is opened in your name, without your knowledge, it may be reflected on your credit report, causing significant harm to your perceived creditworthiness.
  • Outdated or old information: Negative information should be removed from your report after a certain period, generally 7 years. If old information remains, it can have a dramatic effect on your current credit score.

Consequences of False Credit Reporting

When false credit reporting occurs, there is an increased risk of financial stress due to the results. The results of false credit reporting can lead to:

  • Generally inaccurate credit report: Your credit report is the official record of your creditworthiness, if it’s wrong, it can have a snowball effect.
  • Lower credit scores that do not reflect your creditworthiness: Inaccurate information can lead to lower credit scores, which lower your ability to obtain loans or credit products.
  • Higher interest rates or generally less favorable terms: Lenders that do approve you for products will often have to offset their assumed risk by offering less-than-ideal rates or terms.
  • Greater difficulty in obtaining credit, loan, or insurance products: When your credit report is inaccurate, it can prevent you from obtaining approval for any loans, regardless of the rates or terms. 
  • Challenges in gaining employment: Many potential employers run credit checks on prospective employees, and having inaccurate credit information can hurt your chances of getting that job.
  • Challenges in leasing an apartment: Landlords and leasing agents will frequently run credit checks, and if the results aren’t to their liking, it can mean denial.
  • Emotional distress and general harm to your reputation, financial and otherwise: The stress of dealing with financial limitations and false credit reporting can take a significant emotional toll, even damaging your reputation.

The Fair Credit Reporting Act (FCRA) and Your Rights

The Role of the FCRA in Protecting Consumers

If you’re learning about credit health, the Fair Credit Reporting Act of 1970 is one of the most essential cornerstones of that education. The FCRA is a federal law that was enacted to protect consumers by promoting accuracy, fairness, and privacy concerning the collection, dissemination, and general use of the information recorded in consumer credit reports. 

The FCRA also functions to provide accountability, holding credit bureaus and furnishers of information accountable for ensuring the information is all accurate and up to date. 

Your Rights Under the FCRA

There are several rights that the FCRA outlines for consumers. They include:

  1. The right to access your credit report, and to receive a free copy every 12 months from each of the three major credit bureaus: TransUnion, Equifax, and Experian. 
  2. The right to dispute inaccuracies in your credit report. This can be done in several different ways, including by mail, by phone, and online.
  3. The right to receive a prompt investigation and have inaccuracies corrected or removed. This means consumers have the right to have erroneous information corrected or removed within 30 days.
  4. The right to receive notice of any adverse actions based on your credit report, detailing how the information in your credit report was used to decide against you.
  5. The right to bring a lawsuit against any credit bureaus or information furnishers for FCRA violations, and to recover appropriate damages.

Steps to Take Before Filing a Lawsuit

There’s a lot to do before beginning legal action against a credit bureau or information furnisher. When you partner with an experienced consumer credit attorney they will often give you guidance on anything you need to do before filing the lawsuit, but here are some things to consider doing beforehand:

Obtaining Your Credit Report

One of the first things you should be ready to do is to obtain a copy of your credit report from each of the three main bureaus. You are entitled to one free report every 12 months, which you can get from the official Annual Credit Report site, or you can use apps like CreditKarma to monitor your credit reports daily.

Identifying and Documenting Errors

Review all of your credit reports carefully, noting and highlighting any discrepancies, inaccuracies, or errors that you find. Document the errors, and begin gathering evidence that will support your assertions, such as account statements, payment records, and identification records and documents. 

Disputing Errors with Credit Bureaus

For each error or inaccuracy you find, you will need to submit a formal dispute to the credit bureau that is reporting the inaccurate information. You will need to provide them with a clear explanation of the error, supporting evidence, and a request to correct or remove the inaccurate information. 

If the information is being reported incorrectly to the credit bureaus, you may find it more productive to initiate the dispute process with the original creditor or lender.

Escalating Your Dispute

Sometimes you’ll find it necessary to escalate the dispute if the bureau fails to correct the information or fails to remove the inaccurate information following a dispute. If you’re encountering this, you may be forced to open disputes with anyone else who has handled the account, such as the original creditor, creditors, lenders, and even collection agencies. They are all required to provide accurate information as information furnishers under the FCRA.

Filing a False Credit Reporting Lawsuit

If you’ve gone through all of the usual correction and dispute measures, and the false credit reporting still hasn’t been resolved, it may be time to start considering filing a lawsuit. Here are some general guidelines for understanding when it’s time for legal action, and how to take that action effectively.

When to File a Lawsuit

Knowing when to file a lawsuit is one of the most important things. You should consider seeking legal remedies if:

  • The credit bureau or information furnisher fails to correct or remove inaccurate information after a dispute and investigation, or if there have been 30 days without any investigation or action.
  • You have suffered real damages as a result of false credit reporting, such as denial of credit, higher interest rates, job loss or denial, denial of housing, etc.
  • Any of the FCRA laws, or other consumer protection laws, have been violated.

Finding a Consumer Law Attorney

Consult with an attorney experienced in consumer law, and who specializes in credit reporting and FCRA violations, like Fair Credit. They will be uniquely equipped to help you determine if you have a viable case and will help guide you through the entire legal process. Before making any decision, be sure you do some research, seek recommendations, read online reviews, and more. 

Gathering Evidence and Building Your Case

When you partner with a credit repair attorney, they will work closely with you to gather the evidence needed to build a strong case for damages. This will commonly include:

  • Building an accurate timeline of the events related to the false credit reporting
  • Obtaining copies of your credit reports with the inaccuracies highlighted
  • Obtaining documentation of your previous disputes with the credit bureaus and information furnishers
  • Evidence of the damages that you’ve suffered as a result of the false credit reporting
  • Proof of any FCRA violations that are alleged to have taken place

Partner With Fair Credit To Get The Credit Resolution You’re Entitled To

False credit reporting can have a severe negative impact on your financial well-being and overall quality of life. By understanding your rights under the FCRA and following the steps we’ve outlined for you here, you’ll be able to take more effective action to get your credit report inaccuracies resolved. After other avenues of resolution have been exhausted, you may decide that a lawsuit is needed to get your credit report fixed. 

At this important stage, working with Fair Credit can help you take effective legal action to rectify the situation and restore your credit reputation. Reach out today to get started.

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