Seventh Circuit: Under FCRA, A Credit Report Must Be Both Accurate And Clear, And Accuracy Doesn't Necessarily Equal Clarity

By Brian Wolfman

[Introductory Note: This post was updated on May 6, 2007, to eliminate potential ambiguity pointed out by a careful reader.  Nothing of substance has changed from the original post on May 5, 2007.]

The Seventh Circuit just issued a short, powerful decision concerning the Fair Credit Reporting Act's fundamental requirement that “[e]very consumer reporting agency shall, upon request . . . clearly and accurately disclose to the consumer [a]ll information in the consumer’s file at the time of the request.” 15 U.S.C. § 1681g(a)(1).  In Gillespie v. Equifax Information Services, L.L.P., No. 06-1952 (May 3, 2007), the court reminded the world that a technically accurate disclosure is not necessarily a clear disclosure -- and both accuracy and clarity are required to meet the Act's requirements.  In Gillespie, the plaintiffs requested their credit reports, which, among other things, listed the "date of last activity" on certain collection accounts.  Depending on what event triggered the listing in this category, the report could lack clarity as to when delinquency had occurred.  Having clarity on this point could be important to the consumer because, under FCRA, a consumer report may not include “accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.” 15 U.S.C. § 1681c(a)(4).  Here's the Seventh Circuit's key holding:

We conclude that the consumer reporting agency must do more than simply make an accurate disclosure of the information in the consumer’s credit file. The disclosure must be made in a manner sufficient to allow the consumer to compare the disclosed information from the credit file against the consumer’s personal information in order to allow the consumer to determine the accuracy of the information set forth in her credit file. In writing § 1681g(a)(1), Congress requires disclosure that is both “clearly and accurately” made. An accurate disclosure of unclear information defeats the consumer’s ability to review the credit file, eliminating a consumer protection procedure established by Congress under the FCRA.

Comments

[John P.]

Does FCRA address or cover the credit score in addition to the credit report? My experience has been that while the credit agencies have a procedure for consumers to challenge errors in the credit report, and to challenge the credit score when it is based on faulty information in the credit report, there is no procedure to challenge the score on the grounds that it has been improperly calculated even though the credit report itself is correct (i.e., if the score is lowered based on the errant statement that the consumer has opened too many new accounts when all three credit reports show no new activity).

[Scott Kreppein]

Re: Credit Score Error

The FCRA does not cover error in calculating your credit score. The reason is that the methodology for calculating your credit score (FICO score) is a well-kept trade secret of the Fair Isaac Corporation. In theory, a calculation error would be legally actionable under several common law and equitable theories, but without the methodology there is no way to determine whether there has actually been an error, even for pleading purposes. There has been some litigation over whether it is fair to allow this methodology to remain a secret, but determining your FICO score is a private enterprise and public disclosure of the methodology would completely erode its profitability. Thus far, this has been an adequate justification for allowing the FICO methodology to remain a secret.

[Raul]

The equifax credit bureau had violated the FCRA on my brother, by deniying him the rigth to get a free credit report once a year,should I take them to fedral court to make them pay for the violation?

[Jennifer Bilodeau]

I am researching a personal situation. I am not in the legal profession but pretty confident with my extensive documentation.

I have a letter dated 2005 from a creditor indicating they are unable to locate any information or validation of charges on a secured card belonging to me. The letter on creditor letterhead clearly states the account should be deleted.

All three CRA's have received a copy of this letter in excess of 50 times and have disregarded the dispute providing no answer, or a "stock" letter telling me to contact the creditor and get them validating documentation. Each creditor phrases it differently, but essentially they are all sending me back to the creditor who can't even find my social in their system.

This dispute has been "on the books" in excess of 7 years, however, date of last activity has been altered to reflect most recent as of 8/31/07.

Are there any additional cases out there that address disregarded documentation and/or failure to disclose, mistaken Identity, etc.

[Andy the Credit Report Critic]

"Are there any additional cases out there that address disregarded documentation and/or failure to disclose, mistaken Identity, etc."

Hi there,

Interesting previous comment
by Jennifer Bilodeau regarding mistaken identity.

A recent investigation by The Times newspaper unearthed that credit report bureaus are unable to detect when someone applys for credit in their own name using a third party Social Security number.

Sounds scary!

Best regards,
Andy

[Mike Clover]

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[Wesley]

Wow...... it's a nice website with lots of healthy information.

[Debt Help Review]

There are lots of times when clarity is every bit as important as accuracy. Kind of silly that they're not BOTH required.

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[R. Evans]

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[AttractiveCreditSecrets.com]

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