Many consumer protections are in place under the Fair Debt Collection Practices Act (FDCPA), which is a federal law. The FDCPA outlines what collection agencies and other debt collectors can and cannot do while attempting to collect debts. Incorrect or unlawful reporting of consumer debt or credit information to credit bureaus is among the provisions of the FDCPA. Any debt collector that reports false or inaccurate information is in violation of federal law and can be held accountable.
What to do if You Find Your Credit Score has been Affected
A sudden drop in your credit score requires quick attention and you may find a collection agency’s inaccurate reporting is to blame. If this is the case, you will need to take steps to correct the error and hold the collector responsible for intentionally or unintentionally breaking FDCPA mandates.
First, you need to obtain your credit report from each of the three major reporting bureaus: Experian, TransUnion, and Equifax. The error may be listed with each bureau. You can obtain a free copy of your comprehensive credit report once a year by calling 1-877-322-8228 or you can order the free report online at AnnualCreditReport.com.
Once you have the report you’ll know who reported inaccurate debt information and the details of what is affecting your credit score. Under the FDCPA, a collection agency or other debt collector has broken the law if:
- They knowingly reported inaccurate information to a credit bureau
OR
- They should have reasonably known the information they reported was inaccurate.
If a collection agency or other debt collector has broken these FDCPA provisions, you can immediately file a lawsuit against them, even without disputing the information with the credit bureau first.
How Incorrect Information on Your Credit Report can Affect You
Information from credit bureaus affects any major purchase, line of credit, or other financing for which you apply. Your credit score can influence your ability to buy a home, rent an apartment, and even get a job, in some cases. The implications of a credit reporting error are far reaching, which is why there are such stringent consumer protections in place under the FDCPA regarding the accuracy of information reported to credit bureaus.
How can You Prevent Similar Issues in the Future?
Debt collectors are relentless and those that use disreputable methods, like reporting false information to credit bureaus, are notorious for being repeat offenders. The only way to ensure a disreputable collection firm or agent doesn’t affect your credit score again in the future is to ensure that they are held responsible for their actions:
- Report the error to the credit bureau and dispute the inaccurate information that appears on the credit report. Complaints and investigations are red flags to credit bureaus and they are less likely to accept information from the debt collector again in the future.
- Report the debt collector to your state Attorney General’s office and the Fair Trade Commission (FTC). This initiates investigations into the collector’s actions at the state and federal levels.
- Send a formal notice to the debt collector outlining the error and the steps you’ve taken to report their unlawful and irresponsible actions to the appropriate authorities. Strongly emphasize that even further steps will be taken if the error is not corrected and if any similar issues arise in the future.
- Speak with an attorney about your options for holding the debt collector legally and financially responsible for the problems they’ve caused you. Consulting an attorney prior to sending any direct communications to the debt collector may be advisable as well.