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While the prevalence and impact of collection debts on credit reports are clear, what’s even more of a concern is how often mistakes are made. And this flawed reporting is having an impact on consumers’ lives.
Currently, there are no accepted or enforceable standards for when or why debt is reported or when the information must be updated.
There’s no enforced requirement that reporting companies confirm the accuracy of information of a collection’s debt before making a report to the credit bureaus. (To be clear, reporting companies are supposed to give the bureaus accurate information, but they only have to correct it after the fact. After the damage has been done.)
Any Amount of Debt can be Reported, No Matter How Small
There’s no minimum required amount for collections accounts to appear on a credit report, so most amounts are for fairly small amounts—85% are for amounts less than $1,000. There is no clear requirement for when reporters update or correct their information. And multiple officials may be chasing the same debt, so one collector may receive the amount in full while others believe the debt is still owed.
Unsurprisingly, this is all leading to mistakes.
Most Common Complaints
Both the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC) have found that consumers are more likely to complain about collections reporting than any other information on their report.
When consumers complain to the CFPB about collections, 40% of the time, they’re saying that the debt collector has incorrect information or claims on their account. And consumers’ most common complaint is that a debt isn’t even theirs in the first place.
Similarly, in a review of FTC disputes relating to collections accounts, 82% said the debt did not belong to them—a rate of errors that is more than double for other types of tradeline accounts.
The good news is that consumers with wrong information on their credit reports can take action. The FTC also has found that collection tradelines are commonly changed after consumers have initiated formal disputes about their records, and consumers’ credit scores rose after that had happened.
Contact an Experienced NY Credit Repair Attorney
If you have incorrect collection information on your credit report, you have recourse. You can dispute the information. But to do so, contact an attorney who specializes in representing clients like you—a lawyer who can help you repair your record and obtain compensation for any damages you sustained.