Traditional credit reports issued by the big three credit reporting agencies, Experian, Equifax, and TransUnion, do not include any criminal records in their reports. But the reports still do include three types of public records that can cause harm to consumers if they are erroneously reported.
1. Bankruptcy
The first type of public record that can be included in a credit report is a bankruptcy. Under the Fair Credit Reporting Act, bankruptcies can appear on credit reports for up to 10 years. In addition to appearing on the credit report, bankruptcies can also affect the way that your debts should be reported on credit reports. For example, a debt that is discharged in bankruptcy should be reported as having a zero balance owed. Credit reporting agencies have been criticized for years regarding the manner in which debts included in bankruptcy are reported, see White v. Trans Union, LLC, 462 F. Supp. 2d 1079 (C.D. Cal. 2006).
2. Tax Liens
The second type of public record that appears on credit reports are tax liens. Tax liens are issued by the IRS and the IRS does not have to sue the consumer to issue the tax lien. Paid tax liens can remain on credit reports for up to seven years. Unpaid tax liens can remain on reports indefinitely but at least one of the major credit reporting agencies will remove unpaid tax liens after 10 years.
3. Civil Judgment
The final type of public record that can appear on a traditional credit report is a civil judgment. Civil judgments can remain on reports for up to seven years or the date that the statute of limitations has expired, whatever is longer. That means depending on the state, an unsatisfied civil judgment can remain on a credit report for a long time, especially if the creditor renews or revives the judgment pursuant to state law.
Cases Brought Against Experian, Equifax, and TransUnion
Credit reporting agencies have come under some scrutiny for failing to update civil judgments when the judgments are set aside or satisfied. For example in Soutter v. Equifax Info. Servs., LLC, 307 F.R.D. 183, 206 (E.D. Va. 2015), the plaintiff alleged that Equifax reported her as having an unpaid civil judgment when in fact the judgment had been vacated. The issue was allegedly caused by the manner in which Equifax collected information on judgments. The court certified a class of persons (1) who had communicated with Equifax regarding the status of a civil judgment, (2) for whom Equifax did not correct the incorrect disposition, (3) for whom Equifax had issued credit reports that reported the incorrect judgment disposition, and (4) for whom the Virginia court database showed that the judgment had been dismissed, satisfied, appealed, or vacated.
The use of third party information in credit reporting
Credit reporting agencies get their information regarding public records from third parties rather than from the courts themselves. Because credit reporting agencies do not normally disclose the identity of the third party in a credit report, errors can be hard to pinpoint. For example in Dennis v. Trans Union, LLC, No. CIV.A. 14-2865, 2014 WL 5325231, at *2 (E.D. Pa. Oct. 20, 2014), the amount of a tax lien was misreported on the plaintiff’s credit report. The report stated that the source of the information was the county clerk’s office.. The plaintiff contacted the county clerk, but the records were correct at the clerk’s office. The plaintiff disputed the error with the credit reporting agency but it was not corrected. Unbeknownst to the plaintiff, the erroneous reports was caused by an error by the credit reporting agency’s undisclosed contractor that gathered the information rather the county clerk’s office.
What can be done?
If you have a civil judgment, bankruptcy, or tax lien and are worried that it may be inaccurately reported, you can contact the attorney’s at Berger Montague to review your situation, for free.
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