Can You Sue the Credit Rating Agencies – Equifax, Experian, and TransUnion – For Mistakes With Your Credit Report and FICO Score

Read an interesting article in the NY times, discussing states that are suing the various corporate credit rating agencies like Standard & Poor’s and Fitch, because of the losses they bore from securities they rated as AAA. They argue that these “incorrect” ratings have cost them millions now and into the future, and that these agencies be held liable for not doing their due diligence when coming up with their ratings. This got me to thinking, “can we sue the consumer credit rating agencies if they mistakes which cost us the ability to get a home loan or car?”

Already facing a spate of private lawsuits, the legal troubles of the country’s largest credit rating agencies when the attorney general of Ohio sued Moody’s Investors Service, Standard & Poor’s and Fitch, claiming that they had cost state retirement and pension funds some $457 million by approving high-risk Wall Street securities that went bust in the financial collapse. The case could test whether the agencies’ ratings are constitutionally protected as a form of free speech.

The lawsuit asserts that Moody’s, Standard & Poor’s and Fitch were in league with the banks and other issuers, helping to create an assortment of exotic financial instruments that led to a disastrous bubble in the housing market. “We believe that the credit rating agencies, in exchange for fees, departed from their objective, neutral role as arbiters,” the attorney general, Richard Cordray, said at a news conference. “At minimum, they were aiding and abetting misconduct by issuers.”

The litigation adds to a growing stack of lawsuits against the three largest credit rating agencies, which together command an 85 percent share of the market. Since the credit crisis began last year, dozens of investors have sought to recover billions of dollars from worthless or nearly worthless bonds on which the rating agencies had conferred their highest grades. And more litigation is likely. As part of a broader financial reform, Congress is considering provisions that make it easier for plaintiffs to sue rating agencies. And the Ohio attorney general’s action raises the possibility of similar filings from other states.

To date, however, the rating agencies are undefeated in court, and aside from one modest settlement in a case 10 years ago, no one has forced them to hand over any money. Moody’s, S.& P. and Fitch have successfully argued that their ratings are essentially opinions about the future, and therefore subject to First Amendment protections identical to those of journalists.

But that was before billions of dollars in triple-A rated bonds went bad in the financial crisis that started last year, and before Congress extracted a number of internal e-mail messages from the companies, suggesting that employees were aware they were giving their blessing to bonds that were all but doomed. In one of those messages, an S.& P. analyst said that a deal “could be structured by cows and we’d rate it.” Recent cases, like the suit filed Friday, are founded on the premise that the companies were aware that investments they said were sturdy were dangerously unsafe. And if analysts knew that they were overstating the quality of the products they rated, and did so because it was a path to profits, the ratings could forfeit First Amendment protections, legal experts say.

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I know a little bit about the challenges of dealing with the credit bureaus from a six month experience a close friend had trying to clean his credit record. During that time, he lost the house he wanted to purchase because he couldn’t get financing, and for almost 6 months he couldn’t get any new credit. He was finally able to clear up his credit report but I remember him being so frustrated during the whole process, that if it was a regular vendor he was dealing with he probably would have taken them to court for carelessness (or uncaring-ness, a new term he came up with!). I helped him research how he could clear his credit record and what options he had, but it was still a lengthy process mainly because he didn’t initially know his rights and failed to follow-up with written notices.

Under the Fair Credit Reporting Act, consumers do actually have the right to sue the consumer reporting agencies – Equifax, Experian, and TransUnion – in state and federal court for violations of the act. But litigation can be an expensive process, particularly if you lose. So before you consider legal action make sure you try the following steps first :

  • Under the act, consumers also have a right to review their credit report and to have incorrect information corrected (you are entitled to get a free credit report from all the agencies once a year). If you find an error on your report, you should notify the credit bureau in writing immediately. The bureau is responsible for investigating and for changing or removing any incorrect data. The source of the error must then notify all consumer reporting agencies where they sent information. If you are not satisfied with the correction, you have the right to add a brief statement (100 words or less) about the issue to your credit report. The statement should be a clarification, not an explanation, of credit problems.
  • If your credit application is turned down because of an error on your report, the lender is required to provide you with the name and address of the credit bureau that issued the report. Then, you have 30 days to request a free copy from the bureau. The bureaus must disclose to you all information in the report, its source, and who has recently received the report. You have the right to have the credit bureau re-issue corrected reports to lenders who received reports within the last six months, or to employers who received one in the past two years.

  • The Fair Credit Billing Act provides for the prompt correction of errors on open-end credit accounts (department store credit accounts, for example) and protects consumers’ credit ratings while they are settling disputes. Under this law, if a consumer is disputing a charge, creditors cannot report the consumer’s account as delinquent. This applies to open-end credit instruments, such as credit
    cards, revolving charge accounts, and overdraft checking. Consumers who question an item are responsible for notifying the creditor in writing within 60 days of receiving the bill. The creditor must acknowledge the notice within 30 days and may not do anything to damage the consumer’s credit rating while the item is in dispute.

  • You can also lodge complaints and concerns about credit bureaus and credit practices via the Federal Trade Commission ( They cannot directly resolve individual consumer complaints, but they can provide a good basis if you do decide to take legal action down the road.

At the end of the day, the best thing is to regularly monitor your credit score and reports, and to promptly notify agencies (in writing) of any potential issues before hand. While you can sue the agencies, it is unlikely you will get much from them, as proven by past law suits against their corporate brethren. It’s probably much cheaper to signing up for a credit watch or monitoring service, if you are concerned about your credit or need to ensure it is accurate.

~ Improving your FICO Credit Score
~ Five Things To Look For in Getting Low-Cost Auto Insurance Rates
~ How to Save and Make Money with Credit Cards
~ Negotiating Down Your Credit Card Debt by Half or More
~ Will my Mortgage now Qualify for Refinancing under Obama Housing Plan

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14 thoughts on “Can You Sue the Credit Rating Agencies – Equifax, Experian, and TransUnion – For Mistakes With Your Credit Report and FICO Score”

  1. I have try to delete several names from my credit report, addresses, phone numbers and collection accounts that do not belong to me but TransUnion, Equifax and Experian had refuse to do so. I have send police report, court documents and also the Affidavit of Identity theft with the FTC. I have file multiple complains with BBB, Attorney General office and CFPB but nothing. Can I sue them? and would this be a good thing to do?

  2. Here’s my problem: I have access to a few companies who provide me with credit scores for Equifax and Transunion, — Capital One, Lifelock, Credit Karma, and Wells Fargo. The difference in these credit scores swings a MINIMUM of 65 points, the lower end (always Equifax), will prevent me from getting a good rate on a home refinance. Why is there no consistency with reporting and the score? I understand some creditors don’t report to all 3 agencies, but I thought FICO was FICO ??? And here’s another issue: Wells Fargo has one (low) credit score and Capital One has another (65 points higher). The Wells Rep tells me that the reason my FICO score is higher at Capital One is because I’ve had that account for over 20 years. WHAT? He also said Credit Karma’s scores were “always wrong.” Again, I thought FICO was FICO???

    How can we, the people, who rely on our FICO score to go through life (since we can’t just pay cash for everything), rally to get (1) consistency of credit scores across the board, and (2) change the length of time some things are reported. Since the 2008-2009 crash, people are just now having negative items due to unemployment fall off their reports. Can someone point me in the right direction to get help?

  3. I was a victim of charging my checking account for credit rating. I discovered this after approx two years of monthly charges. I noticed the charge one morning and called the bank and was referred to a company located in Costa Rica and the operator told me that I should have stopped this after the first charge and if I didn’t the charge would continue.

  4. I disputed two Amex accounts with the three major CRA’s. Though the two accounts went delinquent simultaneously they continue to report five different dates of deletion which clearly is an impossibility. When asked to provide documentation of their findings/investigation they simply refuse. Nor do they comply with the “30 day” dispute resolution rule. They do what they want because they can. They truly have no oversight. The Consumer Financial Protection Bureau… forget it, they’re worthless and typically side with the CRA’s. Institutional dishonesty is their creed.

  5. Sorry. There is no such protocol. Credit agencies were afforded the right, by the U.S. Supreme Court, to furnish incorrect information about individuals without fear of legal retribution. Be forewarned that if you launch any disputes, the credit agencies have the authority to choose their own defenses and said responses are the final say on the matter.

    • Wrong, wrong, and wrong.
      Dont listen to this clown.
      Sue them in small claims and get there attention.
      No courts afforded them any right to furnish incorrect info this guy is smoking crack.

  6. Very interesting article. The damage done to people’s lives by these evil corporations is inestimable. How have we allowed them to have so much control over us? We think we live in a democracy in The West but the owners of these corporate collossuses with their limitless funds and insatiable greed for power and ever more wealth have simply replaced the tyrannical kings, emperors and despots that used to rule over us. God help us all.

    • That sounds overly dramatic, but as someone that’s been trying to get a free credit report from Experian for a long while now, I can attest that dealing with them is very very very difficult experience. I’ve sent them virtually every scrap of personal information that I have, but they refuse to send me a credit report. It is incredibly humiliating to continually be denied access to my own information.The FTC have a good site for helping with identity theft and they seem like good folks on the help line, but ultimately they are helpless to provide assistance because I don’t get the sense that these agencies respect the FTC or the rules they are supposed to be following. With identity and credit theft soaring in the IT age, I think the FTC needs to seriously look at bringing credit monitoring under direct government control. These agencies are really having negative impact on the quality of life in America.

  7. I would like to sue experian transunion and equifax for keeping deliquency for more the 12 years on my account should be off reportsince 2005. send forms to my address 290 turk street san franciso .

    • just has the very same experience with Experian…Ive been trying to refinance my house for 6 months, and finally found that Experian had state tax liens showing as unpaid that were paid in 2007! The strange thing is that this has never shown up prior to now…No wonder I’ve been denied cc’s, car loans, etc. How is it that an unregulated agency can negatively effect my credit and suffer no consequences …and now I have to wait another 30 days to see if it’s been ‘updated’… wth! total mafia.

  8. I am upset with Equifax and Experian. I submitted request with all three bureaus for my free credit report on April 19, 2012. Transunion gave me my report right on the spot — no problem. Experian and Transunion. Back and forth. They had my name wrong, my intials wrong, my address. After 3 requests online, and a long letter, contacting the BBB in California, contacting the Federal Trade Commission and my senator, I finally got my report June 11, 2012. Equifax? I fax them the requested information with a two*page letter. Well, they told me so far that they have sent it three times to me. Sure they did. The only information that I have ever got from them was a one-page form letter informing me of my name and address. Duh? I know that information. I know who I am. I want a full credit report. They claim they sent me the full report on June 6 and I should receive it no later than June 20. I asked them since they already have the information they requested from me why I couldn’t get the report on line like it should have come from Supervisor “Johnny” said I would have to pay for my “free” credit report to be email to me. The customer service agents treat you so poorly. I want everyone who have ever had a complaint against the credit bureaus to get together and file a united Class Action suit against them. That would be what it would take to stop the bureaus in their tracks.

    • Oddly enough, I had the exact same experience. I was able to get a Transunion report right away because they asked more sensible questions related to my core identity whereas Experian and Equifax present questions that cannot possibly be answered if you are the victim of fraud, such as which of these 4 stores do you have a credit account with? I’ve still not received my Experian report and it has been 2 months now. I did mention the FTC quite a bit in my most recent correspondence so I’m hoping that will prompt them into action, but I’m feeling very small and very powerless at the moment. It is difficult going about your daily life knowing that you don’t even have enough power to gain access to your own information…

  9. Don’t be deterred by legal expense. Small claims court is the inexpensive route and where you can sue the credit agency at little expense to you . In Florida you can sue up to $5,000 and have a trial with 60 days. That will get the credit agencies attention, their own legal expenses will easily exceed $10,000.

    • Hey nick. Where u get the info to sue, I can find the authorized representative toserve them the paper work as to my local court. They need this info.


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