Consumers suing to correct bad credit reports

Some lawyers are proving that you can fight inaccurate reporting by the credit industry. Few businesses arouse as much resentment as credit bureaus and the creditors who furnish information to them; especially when they get something wrong.  If they make errors, chances are that a creditor such as a bank, mortgage company, credit-card company or department store furnished inaccurate information to a credit bureau. Credit bureaus won't help you much under those circumstances. They'll continue to report what creditors tell them. It's up to you to work things out with the bank, mortgage company, credit-card company or department store that messed up your credit record in the first place.

You can have statements attached to your file disputing the information, but it still will turn up on your credit report. But that was pretty much assumed to be as far as a wronged consumer could go. The Fair Credit Reporting Act, which governs credit reporting, says that only a state's attorney general can sue a creditor for furnishing inaccurate information. But if the creditor doesn't fix the inaccuracy permanently and in a reasonable time, you can sue, even though the Fair Credit Reporting Act doesn't explicitly give you that option.


Going to court:   The preferred way to go about suing the bureaus is to sue for defamation. In 1998 a plaintiff won a $4.5 million verdict against the credit bureau TransUnion who had been a victim of identity fraud and had been unable to clear his name. Using Defamation of character as the basis of your lawsuit has been a proven strategy because of the truthfulness of the fact related to your case!   If you actually have to go to court and sue the Credit Bureaus (or that matter any creditor) during a debt validation or credit repair process, you want to do it on the basis of defamation of character or denial of credit.

Here is the case to cite: United States Court of Appeals,Fifth Circuit, Case No. 91-7142, John STEVENSON vs. TRW, April 1, 1993. In a nutshell, here's what the court ruled: Section 1681o authorizes a consumer to recover actual damages sustained from the consumer reporting agency's negligent violation of a requirement under FCRA.  Actual damages include humiliation or mental distress, even if the consumer has suffered no out-of-pocket losses.  In this case, Stevenson suffered mental anguish over his lengthy dealings with TRW after he disputed his credit report:  Stevenson testified that it was a "terrific shock" to him to discover his bad credit rating after maintaining a good credit reputation since 1932.  Stevenson was denied credit three times during TRW's reinvestigation: by Bloomingdale's, by Bank One, and by Gabbert's Furniture Company. Stevenson testified that he had to go "hat in hand" to the president of Bank One, who was a business associate and friend, to explain his problems with TRW. As a result, he obtained credit at Bank One.  Stevenson had to explain his credit woes to the president of the First City Bank in Colleyville when he opened an account there. With a new president at First City Bank, Stevenson had to explain his situation again. Despite the fact that he was ultimately able to obtain credit, Stevenson testified to experiencing "considerable embarrassment" from having to detail to business associates and creditors his problems with TRW.  Finally, Stevenson spent a considerable amount of time since he first disputed his credit report trying to resolve his problems with TRW.

The result:   The district court awarded John M. Stevenson actual damages of $30,000 for mental anguish, punitive damages of $100,000, and attorney's fees of $20,700 for TRW Inc.'s negligent and willful violations of the Act!!  You can fight these guys and win, We can remove negative items and we know the language and methodology to make the bureaus act in your behalf.


In order to make sure you suffered defamation, you need to do the following...


1. Make sure someone other than yourself sees the credit file, so you can prove your character was harmed. Apply for credit somewhere and get turned down. There have been some cases in which sums awarded to consumers over inaccurate credit reporting were overturned because only the consumer saw his or her own file. This point is CRUCIAL.

2. If you were denied for employment based on your credit report, this is a powerful weapon. Make sure you document what happened.

3. Need we say it?  Document everything. Send all letters certified returned receipt. Get copies of their procedural descriptions. Get lenders to send you a letter verifying that the CRA did not contact them.

4. It never hurts to redispute your listings twice. If they deny you twice, that's even more ammunition proving their harmful actions (or inactions against you.)