ACCOUNT STATUS ERRORS
Every credit account or collection account that appears on your credit report contains status indicators to reflect the state of the account (e.g., open, paid, charged off, etc.). These indicators are important because it informs the credit reporting agency how the account should be treated when calculating your credit score. The indicators can also cause credit grantors to reject your application for credit if reported improperly. For example, if a mortgage account erroneously indicates that a foreclosure proceeding was initiated, a future mortgage lender may decide decline your application because the existence of this indicator violates its lending rules. Accordingly, account status errors can be a significant problem for consumers that needs to be addressed.
Double Reporting of A Credit Account
Sometimes the same credit account can erroneously be reported twice such that it erroneously appears as two separate accounts on your credit report. This can be caused by the account number changing, refinancing a debt, or if the debt has been sold to another creditor. Double reporting of an account can affect calculation of your debt load and can be more serious when the account is reporting as delinquent because the account will appear as two unpaid debts instead of one.
Failing to Report Credit & Collection Accounts As Paid
Once a debt is paid off, it is critical to confirm that your credit report reflects that the credit account or collection account is reported to the credit reporting agencies as paid and reflects a zero balance. A common mistake that furnishers of credit information can make is failing to report to credit reporting agencies that a debt as has been paid and to report a zero balance. Without this update to your credit report, the account will continue to adversely affect your credit by remaining as an unpaid delinquent account, or, even if the account is in good standing, will adversely affect the debt load that is represented on the credit report.
Appearance of a New Collection Account For Debt That Was Already Paid
Sometimes, when a debt is not properly recorded as paid, the debt will be erroneously referred out to a debt collector who will then report a new collection account on your credit report. This can have a serious negative impact on your credit because both the original account is still reported as unpaid and now a second collection account is appearing on your report as well. This can also cause problems with debt collection harassment because the collector believes that you never paid the debt.
Reporting An Erroneous Status Indicator With An Account
Sometimes an inappropriate status indicator will be erroneously report in connection with an account. Examples of this kind or error may include:
- Reporting that a foreclosure proceeding was initiated in connection with a mortgage account when such a proceeding never took place;
- Reporting that an account was "included in bankruptcy" when you never filed for bankruptcy;
- Reporting that an account was settled for less than full amount when you paid off the account in full;
- Reporting that an account is "disputed" when you never waged any dispute over the account.
Account Status Errors Are A Serious Problem You Should Not Ignore
If your credit report contains and account status error, you should not ignore this problem. Minimally, you need to contact the credit reporting agency to dispute the erroneous items on the report. You also may want to consider speaking to a lawyer. Account status errors can cause numerous harms including:
- Denials of credit including mortgages, auto loans and credit cards;
- Delays or denial of your employment application if your credit is checked;
- Denial of an apartment or other rental property;
- Denial of utility services such a cable TV or a cell phone;
- Denied insurance.
In addition to these harms, account status errors can adversely impact your reputation and cause substantial emotional stress. All of these harms are compensable under the law, but you are unlikely to receive any compensation without help from a lawyer.
Do You Need Help?
If you think you have an account status error on your credit report, Gorski Law may be able to help resolve the problem and obtain compensation for you. Initial consultations are always free. Call 215-330-2100 or email the firm to schedule a consultation.