The Duty of a Credit Reporting Agency

As the loan and credit culture in America continues to grow in many facets, a person’s credit report can make or break their livelihood. A person with a positive credit report can more easily obtain loans or credit than a person that suffers from a negative credit report. This is why it is important that credit reporting agencies accurately reflect a person’s creditworthiness; otherwise a person that ought to be able to obtain credit might be bogged down by information that should not appear on his/her credit report. 

It is because of this that federal and California state law has imposed a duty of care on all entities that report on the credit worthiness of a consumer. According to the California Credit Reporting Agencies Act and the Fair Credit Reporting Act, Credit reporting agencies and/or bureaus must follow reasonable procedures to ensure the maximum possible accuracy of the information they produce. This means that credit reporting agencies may not report inaccurate information regarding a consumer’s credit worthiness.

The standard imposed by both of these laws does not allow credit reporting agencies to argue that they are just reporting information given to them from other sources; credit reporting agencies must take steps to ensure that the information they receive accurately portrays a consumer’s credit worthiness. Courts have interpreted this to mean that “a report violates the statutes when it is misleading or incomplete, even if it is technically accurate.” Schoendorf v. U.D. Registry, Inc 97 Cal. App. 4th 227, 239 (Cal. App. 2d Dist. 2002). These laws are meant ”to require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit . . . in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.” 15 U.S.C. § 1681e(b).”

If information appears on your credit report that is inaccurate, misleading or incomplete then you should write the credit agency and demand that they remove or adjust the false information such that it comports with the statutes’ mandate of “maximum possible accuracy.”