When Is It Necessary to Bring a Lawsuit for False Information on Your Credit Report?

The consumer credit reporting system in this country is set up to “convict” consumers without any messy, expensive or inconvenient due process. A bank or a credit card company or a debt collector simply notifies one of the three major consumer credit bureaus (Experian, Equifax or TransUnion) that a consumer owes a debt, and, unless that record is corrected, that consumer is deemed to owe that debt in the eyes of any and all creditors who access the consumer’s credit report. The negative credit report (called a “derogatory” in the industry) will stay on the consumer’s credit report for seven years, in the case of a report of a late payment, a default or a charge-off. For a tax lien, judgment or a bankruptcy, the derogatory remains on the consumer’s credit report for 10 years.

How to Handle False or Inaccurate Credit Reporting

If you have a valid derogatory on your credit report, obviously you need to make arrangements to pay it and bring it current. The following steps are intended for those times when you have false or inaccurate information on your credit report. Under federal and state law, credit bureaus and creditors are obligated to remove false or inaccurate information on your credit report upon receiving notification. Remember that, under federal law, you need to dispute with the credit bureaus, not just with the creditor or creditors (banks, debt collectors, etc.) Always send dispute letters both to the credit bureaus and to any involved creditors.

Here are the steps to take to have false or inaccurate information removed:

Prepare a dispute letter to any agency which publishes the false information you are challenging. Be very specific in your dispute letter and include copies of any documents which prove that the derogatory information is false. Keep the letter factual and professional in tone.
Send the dispute letter via certified mail to the credit bureau or bureaus which are reporting the false information.
Definitely do not do a dispute by phone. You will need to have a written record of your dispute.
We are recommending against doing disputes online. For one thing, you do not get a complete record of what you send to the bureaus, and cannot send along any supporting documentation of your dispute. Also, some of the credit bureaus are sneaking in binding arbitration clauses for consumers who dispute online, so consumers who dispute online could lose their right to get justice in the courts with a jury. Arbitration almost always favors big corporations, which is why so many big corporations try to sneak binding arbitration clauses into any agreement or contract that any consumer signs. However, there is no binding arbitration clause where a consumer disputes via certified mail.
Send a cc of your dispute letter to the creditor, debt collector or bank which sent the derogatory credit information to the credit bureau or bureaus. Also send this via certified mail.
The bureau has 30 days to reinvestigate and correct. If you are in a hurry because of, say, a pending loan application, the bureaus have an expedited procedure which you can learn about by contacting them.
The bureau or bureaus will notify you of the results of their reinvestigation. If the bureau or bureaus does not delete or correct the information, you may also wish to consult with an attorney.

My firm specializes in these cases and we have a track record of excellent results with very satisfied clients. We serve clients in Southern California, or who have had their credit damaged in Southern California. If you live elsewhere, go to www.naca.net for a referral to a credit damage specialist attorney in your state. For those no longer with us, you can learn how to notify credit bureaus of death here.