Credit report fix a headache

"You don't understand how much torture I went through," said Mueller, 39, who lives in Sugar Hill. "All the credit bureaus, they control your life. ... It's not fair for them to steal your identity."

Equifax officials declined to comment, citing the pending litigation.

Federal law is supposed to protect consumers from such problems, mandating that credit reporting agencies investigate and promptly correct any errors consumers report to them.

But consumer watchdog groups say the system for disputing credit report errors is badly broken and can have a devastating impact on an individual's ability to get loans, housing, insurance and jobs. They say credit bureaus do little to investigate alleged errors and use an automated system that reduces a consumer's complex dispute letter and supporting documents to a two- or three-digit code.

When credit bureaus refuse to correct errors, the Fair Credit Reporting Act allows consumers to bring suit to enforce the law and collect damages and attorneys fees if they prevail.

The Consumer Data Industry Association, a trade group for the credit bureaus, said the dispute system, with its electronic coding, quickly corrects errors most of the time. Serious, lingering problems are rare, said Stuart Pratt, the association's CEO.

But nobody knows for sure how often credit bureaus make errors or fail to correct them. Regulators at the Federal Trade Commission, which is responsible for enforcing the Fair Credit Reporting Act, are expected to announce plans for a major nationwide survey of credit report accuracy later this year.

"One of the big questions out there is how accurate are credit reports and what is the incidence of error?" said Rebecca Kuehn, the FTC's assistant director of privacy and identity protection.

A Government Accountability Office 2004 survey of 1,578 consumers nationwide found that just 58 percent had ever looked at their credit reports, and fewer than half of them had done so in the previous year. About 18 percent said they had disputed information in their credit file.

Kuehn said the FTC doesn't know how often one consumer's credit information gets mixed with that of another. Anecdotal reports indicate that when it does happen, it tends to involve people with similar names and Social Security numbers, such as siblings or relatives who are a Jr. or a Sr.

"We have looked at that as an area of great concern," she said. Even if it's rare, Kuehn said, it's a significant problem for the consumer.

Robyn Mueller said she has lived that nightmare since 2006.

That's when Mueller first requested copies of her credit reports from the three major reporting bureaus: Equifax, TransUnion and Experian.

When her reports arrived, she said, she noticed a few problems on her Equifax report and sent a letter requesting corrections. In September 2006, Equifax sent back what it said was a corrected report. But the new report contained far more egregious errors than the first one, Mueller said.

Although Equifax addressed its letter to Robyn Mueller and the enclosed credit report had her Social Security number, records show, it was now in the name of her brother, Robert Mueller. It contained many of his credit records and debts, alongside those that were legitimately hers. Robert Mueller could not be reached for comment.

"I started screaming," Robyn Mueller recalled in a recent interview.

Mueller, who lived in Ohio at the time, said she immediately called Equifax but got nowhere. So she sent the first of a series of letters and documents trying to get the credit bureau to untangle the two accounts.

The mistaken information had a such a negative impact on Robyn Mueller's credit, Equifax wouldn't generate a credit score. The Equifax report was a stark contrast to her TransUnion and Experian files, which had accurate information, she said.

At one point, she said, she tried contacting her brother's creditors to get them to remove the accounts from her Equifax file. "These companies would not even talk to me because I was not him," she said.

Each time she requested a new credit report, problems persisted, she said. "I just could not get them to straighten it completely up," she said.

Mueller said she had problems renting apartments, getting jobs and car loans.

She got into the habit of asking what credit reports potential employers or lenders planned to pull and said she tried to explain why her Equifax report looked so bad compared to the others. "It was embarrassing," said Mueller, who moved to Atlanta in December 2006. "And some would smirk, like 'yeah, right.' "

In April 2008, Mueller was ready to buy a house. Mueller, a single mom who works as a service adviser for a car dealership, wanted her daughter to have a yard to play in.

Yet her Equifax report was still riddled with her brother's data. As she shopped for a loan, she said, she was limited to lenders willing to look at her two good credit reports and ignore the Equifax report. Few were willing to do that, she said.

Mueller said she didn't know the Fair Credit Reporting Act allows consumers to sue in such circumstances until she shared her troubles with a customer who suggested she find a lawyer.

Steven Koval, an Atlanta attorney who specializes in credit issues and took on Mueller's case, said it's important for consumers to keep good records —- as Mueller did —- documenting their efforts to correct the error.

"She laid it out on a silver platter," Koval said. "People should not have to go find lawyers and file federal lawsuits to get their credit report fixed." Although Equifax untangled Mueller's credit file after the suit was filed, the case is pending and seeks to recover damages.

Cases like Mueller's don't surprise officials at the National Consumer Law Center. "It's a significant issue," said Chi Chi Wu, a staff attorney for the Washington-based watchdog group, which issued a report in January detailing industry wide failures in the handling of credit report errors.

Most consumer complaints are turned into a numeric code that corresponds to a summary of the dispute, such as "Not his/hers" and "Claims account closed." The code is entered into an electronic dispute processing system and sent from the credit bureau to the lender who supplied the allegedly inaccurate information.

Supporting documentation, such as canceled checks and proof of timely payments, is not routinely sent along to lenders, which Wu says is major flaw.

Pratt, the president of the credit bureaus' trade group, said the system works well and allows thousands of disputes to be processed quickly, many under the 30 days typically required by law. If needed, the system has a data field that allows the credit bureau to add information and note the presence of additional documents.

"I think our members have made it very easy," said Pratt, the trade group's president. "The bureaus want you to pursue your rights."

Protect yourself

Review your reports: It's up to consumers to identify errors in their reports. Georgia consumers, under a combination of federal and state laws, are entitled to two free reports a year from each of the three major credit bureaus. Go to www.annualcreditreport.com or call 877-322-8228.

Dispute errors: Do it in writing and send the letter to the credit bureau by certified mail with a return receipt requested to prove it was delivered. Don't file disputes through the credit bureaus' Web sites, which limit the amount of detail a consumer can provide, consumer advocates advise.

Notify the lender: It's most important to file the dispute with the credit bureau —- because doing so preserves the consumer's right to sue for damages under the Fair Credit Reporting Act if the error isn't fixed. But it also is good to file a dispute with the lender who sent the erroneous information to the credit bureau.

Provide evidence: If you have documents that support your case, such as canceled checks or a letter from a creditor showing a balance was paid in full, provide copies.

Complain to regulators: While the Federal Trade Commission usually doesn't investigate individual cases, the agency tallies complaints and uses them to determine how widespread problems are. Go to www.ftc.gov or call 1-877-382-4357. Officials at the Georgia Governor's Office of Consumer Affairs may be able to help resolve disputes; call them at 404-651-8600.

Hire a lawyer: If the credit bureau refuses to correct the error, talk to a lawyer who specializes in Fair Credit Reporting Act cases. The law allows attorneys to collect their fees from the credit bureaus if you win your case. Lawyers specializing in such cases can be found through the National Association of Consumer Advocates, www.naca.net.

For more information about disputing credit report errors, go to: www.ftc.gov/bcp/edu/pubs/consumer/credit/cre21.pdf

Source: National Consumer Law Center, AJC research

Check our sources

Federal Trade Commission report to Congress on the credit reporting dispute process: http://tinyurl.com/ntbmmn

National Consumer Law Center report on credit report disputes: http://tinyurl.com/cnrg67

Got a tip?

Tell us about your experience correcting errors on your credit reports and let us know what else you want investigated. E-mail spotlight@ajc.com or call 404-526-5041.