Credit Reporting Run Wild

Incorrect crossed out

Did you know that employers and insurance companies are more and more looking at your credit report before deciding whether to hire you or provide you insurance?  Credit reporting continues to expand into areas that surprise most people.  This trend, of course, makes it all the more important that your credit report be free of harmful errors.  If there is something derogatory and inaccurate on your credit report, you may be unfairly denied a job or insurance.

There is no real evidence that your credit score has any correlation whatsoever to whether you might make a good or trustworthy employee or a responsible insured.  Nevertheless, more and more employers and insurance companies are reviewing applicants’ credit reports as part of their review process.  These reviews could be of traditional credit reports – such as those provided by Equifax, Experian or TransUnion – or they could be of background reports.  In the last ten years, there has been huge growth in the number of companies that provide background reports.  The problem is that background reports are notoriously inaccurate, even more so than traditional credit reports.  Sometimes, especially if you have a relatively common name, the background report will falsely show you as a felon, a sex offender or even a terrorist.

Another problem is that the background report company often will not give you a copy of your report, so you can check for inaccuracies, even thought the Fair Credit Reporting Act requires that it do so, free of charge, upon your request.  Or, contrary to the Fair Credit Reporting Act, you may not be told by your prospective employer the name of the background check company, or that a background check is being conducted, and thus, as a result, you are prevented from checking the accuracy of the report.  These failures to follow the law impact not only people looking for jobs but also people with jobs that require them to maintain a security clearance.  With security clearances, credit reports and background checks are the norm.

And although mistakes on credit reports, including background reports, may not be as high as 50 percent, mistakes are surprisingly common.  Studies have consistently put the error rate for credit reports, including background reports, at 25 percent.  Put another way, there is a one in four chance that your credit report or background report contains inaccurate information.  And there is a one in five chance that your credit report or background report contains inaccurate information that impacts your credit score or your ability to obtain employment.  That means 10 million Americans have something on their credit report or background report that is both wrong and harmful.

Negative publicity about the problems in the credit reporting industry is more and more common.  However, this publicity regarding the high error rate has also been largely ineffective in getting the industry to change.  For a recent report on the subject by John Oliver, click here.  Please be aware that John Oliver’s report is performed in his uniquely irreverent style, including plenty of cussing and joking that might offend some.

What can a person do who has been harmed by inaccurate credit reporting?  As mentioned above, negative publicity has not instigated change.  And the credit reporting industry has not been responsive to efforts to force it to clean up its act through government regulation.  High error rates have stayed consistent for decades despite repeated regulatory enforcement actions by federal governmental agencies.  These enforcement actions have resulted in consent orders where the credit reporting agency promises to make improvements.  But the improvements have not been made.

Often filing a lawsuit is the only effective thing to be done with a business or credit reporting agency that refuses or fails to fix an error.  Treinen Law Office regularly handles such suits for consumers, typically on a contingency basis, meaning the consumer is not required to pay anything up front or pay as the lawsuit proceeds.  The Fair Credit Reporting Act contains a fee-shifting provision, which allows courts to order that the company that caused the problem must pay the consumer’s attorney fees if that consumer is successful in showing a violation of law.  Treinen Law Office’s hard work on behalf of consumers in the credit reporting area has resulted in several published opinions in favor of the consumer.  (Some of these opinions can be viewed at our “Opinions” page here.)  If you would like to ask us about what you can do when confronted with inaccurate and harmful credit reporting, we are happy to talk with you.


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