Credit repair is only the beginning step in obtaining good credit scores. Consumers who have successfully removed negative items from their credit files must continue to monitor their credit reports in case the creditor re-inserts the negative item.
Consumers may misinterpret a negative account being removed as a permanent resolution. However, if the item is verified on day 31 or any day afterwards, the credit bureau can reinsert the account in your credit reports.
The Fair Credit Reporting Act (FCRA) governs the process of reinserting previously removed information into a consumer’s credit report.
This section applies when a consumer disputes the accuracy or completeness of information in their credit report and the credit reporting agency (CRA) removes the information as a result of the dispute investigation.
Specifically, Section 611(a)(5)(B) requires that, if the deleted information is subsequently verified as accurate by the furnisher of the information (such as a lender or credit card company), the credit bureau must promptly notify the consumer in writing that the information has been reinserted. The notice must include the name, address, and phone number of the furnisher of the information and inform the consumer of their right to dispute the accuracy or completeness of the information with the credit bureau.
The credit bureau must also provide the consumer with a free copy of their credit report within 5 business days of reinserting the information, if the consumer requests it within 60 days of receiving the notice of reinsertion. This allows the consumer to review their credit report and check for inaccuracies or errors.
Section 611(a)(5)(B) is designed to protect consumers by ensuring that they are informed when previously removed information is reinserted into their credit report. By providing consumers with notice and an opportunity to dispute the accuracy of the information, the FCRA aims to promote fairness and accuracy in the credit reporting process.
This FCRA requirement is not always practiced. In addition, the creditor who reinserts the negative item must also certify the information is correct.
Three options when a negative credit item is re-inserted
Option 1 – Request a new investigation and dispute re-insertion
A simple letter is sufficient:
“On (date) I discovered (negative credit item and account number) had been re-inserted into my credit file. You are required to notify me within five (5) days of re-inserting a previously deleted item. I did not receive any such notification. Please delete this item immediately.”
Simple and straight to the point works well. You do not have to quote the FCRA. Save that for later if you have to threaten to file a lawsuit.
Option 2 – Make Complaints
Start with the complaint Consumer Financial Protection Bureau. The complaint can be against the credit bureau, the creditor or both. According to a 2022 report from the Consumer Financial Protection Bureau (CFPB):
- Credit and consumer reporting complaints accounted for more than 75% of complaints received.
The CFPB has played an important role in protecting consumers from abusive financial practices and promoting transparency in the financial industry. Since its inception, the CFPB has taken numerous actions to enforce consumer protection laws, educate consumers, and hold financial institutions accountable for their actions.
Option 3 – Take legal action
It’s unlikely a creditor, collection agency or furnisher of information will have the accurate documentation to support re-inserting the negative credit item, especially since the item had been previously deleted.
You can sue in small claims court for violations of the Fair Credit Reporting Act (FCRA) rules. The FCRA provides consumers with the right to sue both credit reporting agencies and furnishers of information for violations of its provisions, including the requirement to maintain accurate and complete credit reports, and the obligation to investigate and correct errors when a consumer disputes information in their report.
If you believe that a credit reporting agency or furnisher of information has violated your rights under the FCRA, you may file a lawsuit in small claims court to seek damages for any harm you suffered as a result of the violation. Small claims court is a venue for disputes that involve relatively small amounts of money and often do not require the assistance of an attorney but it’s always a good idea to seek legal counsel first./p>
In a small claims court case, you would need to provide evidence that the credit reporting agency or furnisher of information violated the FCRA and caused you harm, such as by preventing you from obtaining credit, causing you to pay higher interest rates, or damaging your credit score. You may be able to recover actual damages, statutory damages, and attorney’s fees and costs, depending on the nature and extent of the violation.
It’s important to note that before filing a lawsuit in small claims court or any other court, you should first try to resolve the dispute through other means, such as by filing a dispute with the credit reporting agency or furnisher of information or by seeking assistance from a consumer protection agency. If these efforts are unsuccessful, you may then consider filing a lawsuit in court.
More Credit Repair Resources
- How to Settle Your Debts – Find out if your debt with a collection agency can be settled for pennies on the dollar.
- Understanding Debt Validation – Request that a debt collector verify the amount and validity of a debt they claim is owed by you.
- Statute of Limitations on Debt – Your debt may be uncollectible. Review your State’s Statute of Limitations on how long you can be sued for an unpaid debt.
- 25 Credit Fix Tips – Get the best of our credit fix strategies you can easily do yourself.
- Best Credit Repair Companies – When you don’t have the time let a reputable credit repair company get your credit history back on track.