Are there any rules against penalizing consumers for requesting accurate credit reporting?

Question

Most credit reports list a consumer's credit accounts and for each month of history on that account, an indication of account status (e.g. 0/30/60/90 days past due). Some credit reports also list the amount of each month's scheduled and actual payments, which can be compared with each other to discriminate between consumers who are making just their minimum payments, or more or less or none or amounts equal to the full balance.

Like other information on the credit report, these detail amounts can be incorrect, e.g. reporting that the consumer made no payment when a much larger amount was due, even if the same month still shows an "OK" account status. If a consumer is denied credit based on a report containing this incorrect information, s/he might challenge those details, and the creditor/bureau might respond by just removing the account entirely, without warning. If that account is an otherwise satisfactory long-standing account, this could produce a significant drop in the consumer's credit score. The credit bureaus do not necessarily provide a warning (e.g. in the interface where a consumer might decide to challenge those details, so s/he might make a decision informed by knowing the likely consequences of the options) in advance of this penalty being applied.

It seems like it may be contrary to public policy interests to penalize consumers for requesting accuracy in the information credit bureaus report about them.

On the other hand, creditors aren't required to report data to credit bureaus and it seems like there's some policy value in protecting creditors/bureaus' freedom to stop including some of their accounts in consumer credit reporting, even if they use that to effectively penalize consumers for requesting accuracy. Further, there is apparently no requirement for accurate communication of policies, though if this is an incorrect impression an answer or comment can hopefully correct it.

Which set of interests won? Are there any rules that prohibit creditors/credit bureaus from penalizing consumers (e.g. by removal of good information) for requesting accurate credit reporting?

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While I recognize this question may also be on-topic at Law.SE, I'm posting here because this community might have more domain experts able to identify what if any rules exist on this particular topic.

Answer 1

I think you're off base here. The bureaus only remove information if the creditor cannot verify any dispute within 30 days, or if the information's super old. If the creditor can provide corrected information, then the credit bureau is required to apply it to its own database. A dispute can be about the entire account, or it can be about payment status within a given span (or spans) of time.

Of course, it's the consumer who has to initiate the dispute.

Answer 2

To answer the heart of your question, it would be illegal for any credit bureau or creditor to somehow "penalize" you just for trying to make sure that what's being reported about you is accurate. That's why the Fair Credit Reporting Act exists -- that's where the rights (and mechanisms) come from for letting you learn about and request accurate reporting of your credit history.

Every creditor is responsible for reporting its own data to the bureaus, using the format provided by those bureaus for doing so.

A creditor may not provide all of the information that can be reported, and it may not report information in as timely a manner as it could or should (e.g., payments made may not show up for weeks or even months after they were made, etc.).

The bottom line is that the credit bureaus are not arbiters of the data they report. They simply report. They don't draw conclusions, they don't make decisions on what data to report. If a creditor provides data that is within the parameters of what the bureaus ask to be provided, then the bureaus report precisely that -- nothing more, nothing less.

If there is an inaccuracy or mistake on your report, it is the fault (and responsibility) of the creditor, and it is therefore up to the creditor to correct it once it has been brought to their attention. Federal laws spell out the process that the bureau has to comply with when you file a dispute, and there are strict standards requiring the creditor to promptly verify valid information or remove anything which is not correct.

The credit bureaus are simply automated clearinghouses for the information provided by the creditors who choose to subscribe to each bureau's system. A creditor can choose which (or none) of the bureaus they wish to report to, which is why some accounts show on one bureau's report on you but not another's.

What I caution is, just because a credit bureaus reports on your credit doesn't mean they have anything to do with the accuracy or detail of what is being reported. That's up to the creditors.

Answer 3

The Fair Credit Reporting Act specifies in some detail on pages 50-54 (as labeled in the footer, 55-59 as pages in pdf) the process that occurs when a consumer initiates a dispute.

The safe outcome for the reporting agency is to remove the information in dispute from reports within 30 days if the reporting party does not certify the information is complete and accurate (with other statutory timelines for communication to the customer and the reporter).

If you initiate a dispute, then the agency is following the law by deleting the reported information, outside new input from the furnisher. If this is unsatisfactory, you have the following statutory right within § 611. Procedure in case of disputed accuracy [15 U.S.C. § 1681i

(d) Notification of deletion of disputed information. Following any deletion of information which is found to be inaccurate or whose accuracy can no longer be verified or any notation as to disputed information, the consumer reporting agency shall, at the request of the consumer, furnish notification that the item has been deleted or the statement, codification or summary pursuant to subsection (b) or (c) of this section to any person specifically designated by the consumer who has within two years prior thereto received a consumer report for employment purposes, or within six months prior thereto received a consumer report for any other purpose, which contained the deleted or disputed information.

The section that binds furnishers of information (§ 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2], starting on page 78 in the footer) places on them the following specific duties:

(B) Reporting information after notice and confirmation of errors. A person shall not furnish information relating to a consumer to any consumer reporting agency if (i) the person has been notified by the consumer, at the address specified by the person for such notices, that specific information is inaccurate; and (ii) the information is, in fact, inaccurate.

...

(2) Duty to correct and update information. A person who (A) regularly and in the ordinary course of business furnishes information to one or more consumer reporting agencies about the person’s transactions or experiences with any consumer; and (B) has furnished to a consumer reporting agency information that the person determines is not complete or accurate, shall promptly notify the consumer reporting agency of that determination and provide to the agency any corrections to that information, or any additional information, that is necessary to make the information provided by the person to the agency complete and accurate, and shall not thereafter furnish to the agency any of the information that remains not complete or accurate.

So there you have it: they have to stop reporting inaccurate information, and "promptly" notify the credit agency once they've determined what is incomplete or inaccurate. I note no specific statutory timeline for this investigation.