Fair Credit Reporting Act Related Questions

Falling under United States federal law, the Fair Credit Reporting Act (FCRA) ensures that Consumer Reporting Agencies (CRAs), which collect and disseminate such consumer information as credit information, are regulated. Under the Act, CRAs are bound to provide one free credit report a year and take steps to verify the accuracy of any information disputed by the consumer. Consumers may have a variety of questions in cases of negative information.

Below are some of the most commonly asked question on the subject answered by legal experts.

My child moved out of a rented house on a one-year lease in Tennessee with just five days’ notice. Despite paying the lease agreement penalties on time, it has not reflected on my credit report.

As per Tennessee (TN) law, you will have to abide by the lease terms. Check if the lease includes any specific penalties for early breach of agreement. If no such terms exist, you may still be liable to pay for all of the time remaining on the lease under the law of contracts.

However, if you have proof of all penalties paid, then you may send a letter to the landlord / management company — with a copy marked to each of the credit bureaus — with proof of payments. You may request removal of negative remarks within 30 days, failing which you may file a suit under the FCRA.

Why does my credit report show both foreclosure and an open balance at the same time on a short sale with my mortgage company?

In this situation, you may have to sue the lender in the district court. Under the FCRA, willful violation by the lender can lead to a penalty of $1,000, while negligence can cost actual damages plus attorney's fees and court costs. If your case prevails, you may use the court judgment to correct your credit information.

Can I sue a company that is erroneously reporting my credit report and are refusing to correct it?

Typically, in a case like this, one needs to send a letter demanding removal of negative information within 30 days and advising them that failure to do so will result in a lawsuit. Besides the nature of the complaint, the letter may state: "Your offices have reported invalidated information to any or all of the three major Credit Bureaus (Equifax, Experian or TransUnion), and this action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following: (1)Violation of the Fair Credit Reporting Act, (2) Violation of the Fair Debt Collection Practices Act, and (3) Defamation of Character.”

Is it correct that once a property has been foreclosed and then bought and resold, the monies owed are removed from the credit record?

Only the mortgage is discharged by your foreclosure. You continue to have a personal liability to pay off any remaining dues — and it is best to do so before lender updates your credit report — unless the bank at its discretion chooses to forgive the rest of your debt. You may contact the collections department of the lender for information on the dues, assuming the lender has not referred your account to a collection agency.

The FCRA seeks to curb negligent, abusive and unlawful collection or credit reporting. If you feel that your credit report score affects your creditworthiness adversely, seek insights from Legal Experts.