Steve Weisman is a lawyer, college professor, author and one of the country’s leading experts in cybersecurity, identity theft and scams. See Steve’s other Con Watch articles.
The recent massive data breach at Equifax drew the attention of many people to the role that credit reports play in identity theft. Armed with personal information about you, a criminal can exploit your credit report for profit. Credit reports are used for much more than evaluating your creditworthiness. They’re used for assessing applications for insurance, renting an apartment, getting a job, being promoted at work, enlisting in the military, and obtaining a professional license. A corrupted credit report — whether due to the actions of an identity thief or merely a mistake — can have devastating effects and can be difficult to fix.
How Credit Reporting Works
Each of the three major credit-reporting agencies — Experian, Equifax, and TransUnion — receives more than two billion items of information on individual accounts each month. These are reported voluntarily by businesses with which consumers have accounts. These businesses report positive information about the account, such as timely payment history, as well as negative information, such as late payments or an account being turned over to a collection agency.
Because the volume of information is so great, mistakes are virtually inevitable. A study by the Federal Trade Commission determined that 26 percent of consumers found material errors in at least one of their credit reports. This is why everyone should regularly monitor their credit reports for errors or indications of identity theft.
How to Get Your Free Credit Report
While a number of companies will regularly monitor your credit report for a fee, you are entitled by federal law to a free annual copy of your credit report from each of the three major credit-reporting agencies. You should request a report from each agency every year. I suggest staggering your requests — request a report from one of the three agencies every four months. Be careful when ordering your free credit reports: There are numerous scammers who appear to offer free credit reports but who will charge you for additional services you unwittingly signed up for. The one place to order your truly free credit reports is annualcreditreport.com.
Dealing with Credit Report Errors
If your credit report contains errors or indications of identity theft, promptly notify the credit-reporting agency that you are disputing particular items and indicate your reason for doing so. Bad information might be due to identity theft or to an error in which someone else’s debt was mistakenly placed on your credit report.
After you have informed the agency, they have up to 45 days to investigate the problem, unless they deem your request to be frivolous. If the agency determines that the information is indeed inaccurate, they must delete it from your credit report. If you request it, the agency must also send a corrected copy of your credit report to anyone who was sent a copy of your report containing the misinformation.
The agency also must make sure that your information is not only accurate, but complete. For example, if your credit report indicates that you made late payments but neglects to show that you are now current in your payments, your report must be corrected to reflect this fact. If the agency is unable to verify whether the contested information found in your credit report is accurate, the law requires that it be deleted.
However, if the agency concludes that the disputed information is both accurate and timely, it must notify you of their determination. You then have the right to add your version of the story — using no more than 100 words — to your credit report.
Identity Theft and Your Credit Report
If negative information appears on your credit report as a result of identity theft, federal law requires the credit-reporting agencies to block that information from appearing on your credit report. To qualify for blocking of such information, you must give the agency a copy of the identity theft report you file with a law enforcement agency, such as your local police department. This is why it’s important to file a police report even if there is little or no chance of the identity thief being apprehended.
Once you have shared the police report with the agency, it must promptly notify the company or companies that provided the false information, informing them that the information was likely the result of identity theft. It then becomes the obligation of the company that had provided the erroneous information to institute procedures to prevent this now blocked information from being resubmitted to the credit-reporting agencies and appearing again on the identity theft victim’s credit report.
Monitoring your credit reports can be a tedious process — especially if you find identity theft or errors — but being vigilant now can prevent ugly surprises later.