My name is Ely and I am another expert with JustAnswer. Allow me to answer your question.
No, this is not legal. However, one has to take several steps in order to "strengthen" one's position before taking any concrete action.
1) The first thing that one may wish to do is to challenge the credit reporting like your previous expert suggested. This is to simply show that this has been done. One cannot expect to have a suit (read on) without attempting to first correct any issues as dictated by law, which allows for a challenge. This is done by a "credit dispute" letter - see here
2) The credit bureau has thirty days to investigate your dispute and respond to you, in writing, with the results of the investigation
. Any data you provided about the inaccuracy of the information will be forwarded to the creditor. The creditor is then required to respond back to the bureau. Then, the bureau makes an arbitrary decision based on the evidence provided. If the bureau agrees with you, the credit history is taken off. Also, if the creditor does not respond, then the bureau makes a default decision in your favor. Once the investigation is complete, the credit bureau will provide you with the results, along with a free copy of your credit report if the dispute resulted in a change. You can request that the credit bureau send a correction notice to any company that accessed your credit report within the past six months.
3) If this is done and the credit report agencies REMOVE the false report, then one may still have a suit against the lender themselves. If this is done and the credit report agency DOES NOT REMOVE the false report, then one may have a suit against both the lender and whatever agency does not.
4) BUREAUS: Under the Fair Credit Reporting Act (FCR), a lender has to take off any report that they know is false. For willful noncompliance with the FCR, a consumer may, under recover the greater of either actual damages or a statutory minimum of $100 to maximum of $1000, plus possible punitive damages, as well as reasonable attorney's fees and costs. For negligent non-compliance, this is actual damages, plus attorney's fees.
5) LENDER: One can sue the lender for defamation, possibly. Defamation exists when: The defendant made a false statement about the plaintiff, there was an “unprivileged” publication to a third party, fault by the defendant of “negligence” or worse, and the publication damaged the plaintiff’s reputation. One would have to show how the false reporting has hurt you.
6) Statute of limitations do apply. For a bureau, a consumer may file a suit in state or federal court
to enforce the FCR intwo years from discovery of the violation or five years from the date of the violation. For defamation, the statute of defamation is one year (although if it is ongoing, the statute of limitations has not even begun to run yet).
Whether or not one wishes to take the actions above is up to them, of course. This does happen - for example, see here
I hope this helps and clarifies. Good luck.
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