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Can I Sue a Free Credit Score and Free Credit Report Company?

Yes, you may be able to sue a credit reporting agency if they fail to remove inaccurate information from your credit report. Under the Fair Credit Reporting Act (FCRA), you have the right to challenge incomplete or inaccurate information on your credit report. If you notify a credit reporting agency of an error, they must investigate and correct or delete the inaccurate, incomplete, or unverifiable information. Should they fail to do so, you can sue them for violating the FCRA.

Even if you have a valid claim, however, credit reporting agencies do not make themselves easy targets for lawsuits. They have a lot of resources at their disposal and retain some of the best lawyers available. If you do decide to sue one, you should consider getting legal advice from an experienced consumer protection attorney. An attorney can help assess your claims and advise you about what the best course of action may be.

What Is a Credit Report?

Credit reporting agencies, also known as “credit bureaus," gather and maintain a consumer's financial data and credit history into what's called a credit report. Your credit report lists your bill payment history, current types of debt, student loans, bank and credit card accounts, tax liens, and other financial information. It shows show where you live, whether you've been sued or arrested, and whether you've faced foreclosure or bankruptcy. They are essential for managing personal finance.

Credit reports determine your creditworthiness. They help lenders decide whether they will lend you money and what interest rate. They are also used by employers to decide whether to give you a job, insurers to determine your rates, and landlords to decide whether to rent property to you.

Credit Reporting Agencies

The three major credit bureaus are TransUnion, Experian, and Equifax. They gather and maintain data relating to a consumer's credit use in a credit file. They obtain that data from your creditors and from public sources. Creditors may report to one, two, or all three agencies. The agencies do not share information, so your credit report may vary slightly from agency to agency.

Under federal law, you have the right to obtain a free credit report every twelve months. You can obtain reports from each agency through AnnualCreditReport.com. You should read your reports carefully to make sure the identifying and account information is accurate, because errors on your report can lower your credit score.

If you believe you have been the victim of identity theft, you can contact the three agencies and have them impose a credit freeze. That will prevent anyone posing as you from being able to get new credit. A credit monitoring service such as Credit Karma may be able to provide you with some degree of comfort.

Credit Scores

A credit score predicts how likely you are to pay a loan back on time. Credit reporting agencies use a mathematical formula called a scoring model to create your credit score from your credit report. Most credit scores range from 300 to 850 — the higher the score, the easier it is to qualify for a loan.

There are many types of credit scores, but the two main ones are:

  • FICO score (used by most lenders)
  • VantageScore (developed by TransUnion, Experian, and Equifax)

Be wary about relying on free credit scores you can pull off the internet. You want to make sure that the information you get is accurate and up-to-date.

Credit Reporting Errors

According to Consumer Reports, more than a third of study participants identified errors in their credit reports. Credit reporting errors can hurt you in many ways. You should review your credit reports carefully for inaccurate and incomplete information.

Some common errors in credit reports include:

  • Identity errors (wrong name, wrong social security number, incorrect accounts due to identity theft, etc.)
  • Incorrect reporting of account status (closed accounts reported as open, credit accounts that are incorrectly reported as delinquent, same debt recorded more than once, etc.)
  • Data management errors (reinsertion of incorrect information after it was corrected, accounts that appear multiple times with different creditors or late payments, etc.)
  • Balance errors (accounts with an incorrect current balance or incorrect credit limit)

What Should You Do if You Find an Error on Your Credit Report?

Suppose you apply for a credit card and the credit card issuer denies your application. You get a copy of your credit report, which shows someone with your same name has recently declared bankruptcy twice. If you find an error on your report, what should you do?

Contact the Credit Bureau

The first thing you should do is notify the agency and open a dispute. Under the FCRA, you have the right, among others, to challenge incomplete or inaccurate information on your credit report. If you notify a credit reporting agency of an error, they must investigate (typically by checking with your creditors) and correct or delete inaccurate, incomplete, or unverifiable information.

You can open a dispute with each agency through the following links:

The agency will contact the “furnisher" of the information (typically a credit card company, a bank or other lender, or a debt collection agency) and try to verify the information in their report. They generally have 30 days in which to get back to you with the results of their investigation. If they agree with you, you're almost finished. Just ask them to notify anyone who recently got your report of the correction.

Make sure you check your reports with the other agencies (they don't always have the same information) to make sure any error is fixed there as well.

What if the Credit Bureau Won't Fix Its Mistake?

If they don't correct the error, you can submit your own written statement to tell your side of the story about the data. That statement becomes part of your report.

You can also dispute the error with the furnisher. Send them a letter that:

  • Notifies them that you are disputing an error
  • Includes your full name and address
  • Identifies each bit of inaccurate information you want corrected and why
  • Includes copies of the documents that support your position

The furnisher must notify the credit bureau about the disputed information, and the credit bureau must include a notice that you are disputing it as inaccurate or incomplete. If the furnisher determines that they made an error, they must notify the credit bureau to correct your report.

File a Complaint

Say those options don't work. The two bankruptcies stay on your report. If that happens, it's time to escalate.

FTC Complaint

Your first option is to file a complaint with the Federal Trade Commission (FTC). While the Consumer Financial Protection Bureau (CFPB) regulates credit report agencies, the FTC is responsible for enforcing the FCRA.

The FTC has sued credit reporting agencies, charged debt collectors with providing inaccurate information, and charged users of credit reports for failing to notify consumers when they make negative decisions about them based upon a credit report. You can file a complaint with them at www.reportfraud.ftc.gov.

State Attorney General

You can also ask your state's attorney general for help. Each state has its own consumer protection department that handles complaints against, among others, consumer reporting agencies. They can help guide you through the process, provide you with information, and hopefully obtain a favorable resolution for you.

Lawsuit

The third option is to sue the credit reporting agency in state or federal court under the FCRA. Congress enacted the FCRA in 1970 to protect consumers and regulate how credit information is used and disseminated. Credit reporting agencies can violate the FCRA in any number of ways:

  • By failing to maintain accurate, updated reports
  • By mixing up one person's information with another's
  • By failing to follow the rules for handling disputes
  • By providing information to unauthorized users
  • By providing your report for an impermissible purpose (for example, to determine if you have assets before someone sues you)
  • By failing to send you notifications about your credit report or score

What you can recover in a lawsuit depends on the nature of the FCRA violation.

Willful Violation

Willful FCRA violations are the more serious violations. For a violation to be willful, a credit reporting agency must knowingly or recklessly take action that violates the FCRA and causes you harm. A consumer can recover the following damages for willful FCRA violations:

  • Actual damages (financial losses that can be proved)
  • Statutory damages (damages that don't require proof, but the compensation is limited to between $100 and $1,000)
  • Punitive damages (money intended to punish a wrongdoer for outrageous behavior and deter them from violating the FCRA again)
  • Court costs
  • Attorney's fees

Negligent Violation

If a credit reporting agency fails to use reasonable care and violates the FCRA, they are said to have negligently violated the statute. A consumer can recover the following damages for negligent FCRA violations:

  • Actual damages
  • Court costs
  • Attorney's fees

Beware of Unsupported Claims

Note that if you lose your FCRA lawsuit and the court finds that it was frivolous, it can order you to pay the credit reporting agency's attorney's fees. So you want to make sure you have all your ducks in a row before you sue.

Class Action

In a rare case, you may be able to file what's called a class action. A class action is a case in which a large number of people file virtually identical claims as a group in a single lawsuit. Class actions are particularly useful when bringing your claim alone wouldn't be worth the expense.

A Consumer Protection Lawyer Can Help You

In many ways, consumers are at the mercy of credit reporting bureaus. They depend on the accuracy of their credit reports for what they can buy, where they can work, and where they can live. You should stay on top of your credit reports to make sure that they are accurate.

If you find an error, you should try to get the agency to fix it. But if they won't, you have legal options. FCRA cases can be complex, so consider speaking with an experienced consumer protection attorney to learn more about your legal rights. They can represent you in court if you decide to file a lawsuit.

Next Steps

Contact a qualified consumer attorney to assist with any credit, banking, or finance issues you face.

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