Legal Ease – Avoiding Credit Crisis, Vol 2

logo-black-lobelloBy Black & lobello

Nevada is facing a debt crisis. According to the Urban Institute, 47% of Nevadans have reported debt in collections. Equally alarming, Nevada has the highest average total debt in collections per person in the nation at $7,198. This is compared to national average of 35.1% and $5,178, respectively.

As a native Nevadan, I know we are better than these figures reflect. As an attorney practicing in consumer litigation, I also know much of this negative reporting stems from fraudulent or incorrect information. The good news is this trend does not have to continue. There are simple, concrete steps each Nevadan can implement to drive these figures down and help our State emerge from this crisis. So, where do you start?

First, recognize the problem. Knowledge of improper reporting is the crucial starting-point toward improving your credit and permanently removing this information from your file. Many consumers only recognize an error — typically a fraudulent account, or an account in collections — when a lender pulls their credit report during a loan or credit application process. At that point, it’s probably too late. Many companies and lenders refuse to issue credit or loans to consumers with collections on their file. And those lenders who issue credit to consumers in collections will charge astronomical interest rates for the privilege. This is why it is so important to pull your credit report at least once per year to confirm the information is accurate and up-to-date. Under the Fair Credit Reporting Act (FCRA), you are entitled to one free credit report per year from each of the three major credit-reporting agencies (Equifax, Experian, and Trans Union).

The next step is identifying any incorrect information and issuing a dispute with the major credit-reporting agencies. Credit disputes are written statements identifying incorrect or fraudulent reporting and demanding removal. Disputes are typically sent via certified mail to confirm delivery. Upon receiving a dispute, the credit-reporting agencies must contact the “furnisher” (typically a bank, loan servicer, or collection agency) to verify the disputed information.

If the furnisher fails to verify the debt, the agency must remove the disputed information. The agency must complete its investigation and remove the erroneous information within thirty days, and must indicate on your report that you dispute the accuracy of the reported information if you send a notice requesting this notation.

For the majority of consumers, a written dispute should solve the problem. However, if the incorrect information remains on your file, the only alternative is litigation under the FCRA. Litigation can be difficult and time-consuming for the average consumer. Thankfully, the FCRA shifts the responsibility for the consumer’s attorney’s fees and costs to the defendant or defendants if the consumer prevails. The mandatory fees provision also places a premium on resolving these matters quickly and efficiently. Typically, FCRA cases are resolved at no cost to the consumer and result in the permanent removal or correction of the information, along with an award of statutory or actual damages.

Cleaning up your credit report may be one of the most important decisions you can make for your financial future. Implementing the steps outlined in this article, consumers have the power to correct potentially devastating errors and improve their credit score.