To some people it's an investment; do the math. If it costs you $20,000 in legal costs to force a lender or credit bureau to remove an inaccurate collection and the removal allows you to qualify for a mortgage interest rate that saves you $100,000, you tell me, was that a wise investment?
Los Angeles, CA (Vocus) February 6, 2009
"Imagine this scenario ... You discover errors on your credit reports by one or more of your lenders and you challenge them and ask the credit bureaus to correct or remove them. Receiving results thirty days later, the credit bureaus send you a reply confirming that what they have on file is accurate and it will not be removed or changed. They also direct you to contact your lender if you have any further questions regarding that allegedly incorrect credit reporting. You take the same course of action with the lenders reporting the incorrect information and, again, you are unsuccessful in getting the items corrected," says Attorney Edward Jamison founder of Jamison Law Group and CreditCRM.
''This scenario just described happens thousands of times every week,'' says Jamison. And while the Fair Credit Reporting Act is designed to protect consumers from credit bureau and lender negligence, the number of valid challenges to credit report data is not decreasing. Unfortunately, the number of challenges that result in credit reporting data being amended in favor of the consumer pale in comparison to the number that remain the same.
At this point the consumer has two very simple options; they can either live with the erroneous information until the state or Federal credit reporting statute of limitations expires, normally seven years, or they can escalate their efforts to have their credit reports corrected by filing a lawsuit.
Many experts are predicting that 2009 will yield an increase in consumer credit lawsuits due, in part, to consumers feeling the sting of increasingly difficult access to credit because of the credit crunch and a willingness to incur the costs of litigation to restore their good credit standing. "To some people it's an investment; do the math. If it costs you $20,000 in legal costs to force a lender or credit bureau to remove an inaccurate collection and the removal allows you to qualify for a mortgage interest rate that saves you $100,000, you tell me, was that a wise investment?" says Jamison.
In fact, it's possible that you'll recover all of your legal costs as part of a settlement if your case is strong. It seems logical that the credit bureaus would not prefer a jury determine punitive damages in a case where they have sold credit reports to a lender that contained inaccurate information, but there is also a risk that the judge will grant only a portion or none of the Attorneys fees and then you're out that part of the money. The trade off for the credit reporting industry is legal fees and a controlled settlement amount versus the unknown of taking the case to trial where the odds are not certain that at least one of the members of the jury has not had a similar experience with a credit bureau or lender.
"So how do you know if you're prepared to sue your lender or one of the credit bureaus,' says Jamison?
Here's a checklist. If you can't answer yes to each of these then litigation may not be for you.
1. Have you documented all of your calls with the lender and credit bureau? This means every conversation you've had with them since you started your attempts to have the errors corrected. This can be as simple as a handwritten summary of the conversation with dates and names.
2. Have you attempted to have the item corrected using the standard protocols? You can't simply file a lawsuit against the credit bureau without giving them the opportunity to correct their error. Be sure that you've exhausted your rights to challenge credit report items as defined in the Fair Credit Reporting Act.
3. Have you suffered any damages due to the incorrect item? If not, then think twice about filing a lawsuit. Damages can be credit declinations, credit approvals with disadvantaged rates, higher insurance premiums, or the loss of a job due to credit report pre-employment screening. Can you document these things?
4. Can you tie the damages to the incorrect item? Are there other seriously negative items on your credit reports that are completely accurate that can be blamed for your damages?
5. Do you have copies of your credit reports and FICO scores and can you put together a chronology of credit reports and scores? If you can't, then you can subpoena the credit bureaus for archived credit reports and scores, although they will object profusely.
6. Are you absolutely certain that what's being reported is incorrect? Before you file a lawsuit you need to do a reality check. If the items are accurate but simply not to your liking, save your money.
7. Does your case have a chance? An expert witness can assess this for you before you spend a dime on a lawyer and can give you an honest assessment of your chances for success and ways to better prepare for litigation.
About CreditCRM and Attorney Edward Jamison
Edward Jamison is the founder of Jamison Law Group and the creator of CreditCRM. He is an attorney and nationally recognized as an expert in credit repair and identity theft. Edward sits on the board of advisors for the National Association of Credit Services Organizations and has been the outspoken advocate for ethical credit repair since getting into the business in the year 2000. Edward has been featured as a credit expert on NBC, CBS, Fox, the Wall Street Journal, the Mortgage Market Guide, Mortgage Planner Magazine, the Mortgage Press, the Scotsman Guide, Broker Banker magazine and more. Please visit the CreditCRM blog at: http://creditcrmblog.blogspot.com/ .
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