CONSUMER LAWS
Consumer Laws

Unfortunately, credit problems are not only limited to our immediate ability to manage our finances and make payments on time. If you were past due on credit obligations and brought your account(s) back to a current status, the damage that was done while you were behind may follow you for a while. Being current on credit obligations bodes well for you in that it demonstrates your ability to afford to meet immediate obligations, but the creditors are also interested in your "past track record" because they fear that there may be a correlation between past history and future expectancy. To remove derogatory information from your credit, your credit often has to stand the test of time. You can improve your credit by bringing your accounts current and remaining current on your obligations. Staying current on your obligations demonstrates that your finances are more stable and that you can effectively manage your finances and your debt. To understand the rules that govern how long information can stay on your credit report you need to understand the Fair Credit Reporting Act.

The Fair Credit Reporting Act created rules that govern reporting of information as it appears on credit reports. Initially, the parameters of reporting guidelines in the Fair Debt Collection Practices Act were vague. Most information could remain on a consumer’s credit report for approximately 7 years (Bankruptcy could be reported for up to 10 years) but the limits of when the seven-year period began and ended were not clearly defined. In 1996 the Consumer Credit Reporting Reform Act was created to clarify the credit reporting guidelines that are set forth in the Fair Credit Reporting Act.

In accordance with the Fair Credit Reporting Act, the following information that was reported to a credit bureau on or after January 1, 1998 is not permitted to appear on a consumer's credit report. Information that was reported to a credit bureau earlier than January 1, 1998 may not be subject to the same requirements.

Bankruptcies that date back more than 10 years from the date of entry of the order of relief from or the date of adjudication.

Civil suits, civil judgements, or records of arrest that date back more than 7 years from the date of entry or that exceed the statute of limitations.

Paid liens that date back more than seven years from the date of the report.

Accounts that were placed for collection or charged off which date back more than seven years beginning 180 days after the last payment was due prior to the account being turned over to collections or charged off.

Any other derogatory information other than records of conviction for crimes that date back more than 7 years from the date of the report.

The above referenced guidelines are not applicable for any consumer report to be used in connection with any of the following:

  • A credit transaction involving or expected to involve a principal amount of $150,000 or more.
  • Underwriting life insurance, which may be expected to include a value of $150,000 or more.
  • Pre-screening for employment of any individual at a salary of $75,000 or more.

Other consumer reporting guidelines:

Bankruptcy

For the protection of the consumer, consumer reports are required to meet other guidelines. If the source that provides information regarding a bankruptcy indicates what chapter was filed, the reporting agency must include the chapter on the credit report. Additionally, if a bankruptcy is withdrawn before "final judgment" and the agency has received information confirming that it was withdrawn, the agency must indicate it on the consumer report.

Accounts that are voluntarily closed by the consumer

When including information that is relative to a consumers account on a report, if an agency receives verification that the consumer voluntarily closed the account, they are responsible for indicating on the report, that the consumer voluntarily closed the account.

Disputes

An agency is responsible for noting that there is a dispute over information that is reported on a consumer report if the consumer directly notifies the agency. It is the agency's responsibility to investigate and record the status of the disputed information or delete the information from the consumer report. There is a 30-day time frame that begins on the day the agency receives the formal notice of dispute from the consumer, during which the investigation must be completed. If, during the course of the investigation, the agency receives additional "relevant" information pertaining to the dispute, they are responsible for extending the investigation period for an additional 15 days. The agency does not have to provide a 15 day extension if, during the initial 30 day period, it determines that the information that a consumer has supplied to support their dispute is "inaccurate," "incomplete," or unverifiable.

If, after investigating the dispute, the agency determines that the furnisher of the disputed information (creditor) provided "inaccurate or incomplete," information, the agency must correct the information as it is reported on the file, or delete the incorrect information. If information is deleted as a result of a dispute investigation and it is in excess of three days since receiving notice of dispute from a client, the agency must mail written notice to the consumer of the results of the investigation within 5 business days. The written notice has to include a statement that the investigation is complete and a copy of the consumer report that reflects any changes that resulted from the dispute investigation. It must also include a notice advising that the consumer has the right to add a statement to their file that disputes the "accuracy and completeness of the information" (see consumer statement.) The agency must provide a confirmation of the consumer's right to have the agency provide notification to any person who previously had received a copy of the incorrect report within 5 business days. Specifically, the agency must submit a copy of the corrected report to any person who received the report within two years prior for employment purposes, and to any person who received the incorrect report "for any other purpose" within six months prior to the correction. If the consumer requests, the bureau is responsible for including a description of the procedure that was used to determine the accuracy and completeness of the information within 15 days after receiving the request. If an agency deletes information as the result of the dispute within three business days or less from the day that the agency received a notice of dispute from a client, they may notify the consumer by telephone of the deletion.

The agency is responsible for reviewing all the "relevant information" that a consumer provides but they can end the investigation if the consumer does not provide enough information to support their investigation. The agency may also terminate the investigation if they "reasonably determine" that the dispute is "frivolous" or "irrelevant" and they must notify the consumer within 5 days. The notification must include the reason for terminating the investigation and it must identify information that is required to investigate the dispute. When an agency provides notification of the results of an investigation to a consumer, they must include a notice that the consumer has the right to request that the agency submit notification to other agencies through an automated system that enables them to share information with other bureaus.

Reinserting previously deleted material

Information that has previously been deleted from a report file may only be re-added if the creditor who is reporting the information "certifies" that the information to be re-added is "complete and accurate." Within 5 days of the reinsertion of information, the agency must notify the consumer in writing. The agency is responsible for providing information identifying the party that provided the information that lead to the reinsertion of information on a report. The agency must also provide the address and contact information for the party who provided the information, and they must provide notification to the consumer that the consumer has the right "to add a statement disputing the accuracy and completeness of the disputed information." Consumer reporting agencies are responsible for taking "reasonable procedures to prevent the reappearance of information" that has previously been deleted. Agencies that maintain files on a nationwide basis must have an automated system that allows parties who provided the information to the agency (creditor) to be able to report "incomplete or inaccurate information," as determined by the investigation to other reporting agencies.

Your right to include a consumer statement

If you disputed information that appears on your credit report and the credit bureau determines that you have not provided enough information to warrant changing the report or deleting the information, you are entitled to prepare a statement to be added to your credit report. The statement must be limited to 100 words. Preparing a statement will give you an opportunity to fully explain the reason why you are disputing the information despite the fact that you were unable to provide enough supporting evidence to have the information changed or removed.

Guidelines governing how creditors report information to the credit bureau(s)

  • They cannot report information that they know is incorrect.
  • They cannot ignore information that contradicts information that they have on file.
  • They must notify the credit bureau if a debtor disputes information with them.
  • They must indicate when a consumer voluntarily closes an account.
  • They must investigate a consumer dispute within 30 days of receiving notice.

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