If your credit report shows a balance that is wrong, federal law gives you the right to dispute it. The credit bureau must reinvestigate for free, generally within 30 days, and tell the company that reported the balance. If the balance turns out to be wrong, or no one can verify it, the bureau must correct it or delete it.
Most people facing a wrong balance find it at a bad moment: while applying for a loan or an apartment, or after paying an account off and seeing it still listed as owed. The number looks plainly wrong, yet it is unclear who made the mistake, who has to fix it, or whether a dispute will actually change anything. This page walks through what the Fair Credit Reporting Act requires of the credit bureaus and of the companies that report to them, and what each step of a dispute looks like.
What a Wrong Balance on a Credit Report Means
A credit report is what the law calls a consumer report. Under 15 U.S.C. § 1681a(d)(1), that term covers, in general, any communication by a consumer reporting agency "bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living" that is used or expected to be used or collected as a factor in establishing the consumer's eligibility for credit or insurance to be used primarily for personal, family, or household purposes, for employment purposes, or for another purpose authorized under 15 U.S.C. § 1681b.
A consumer reporting agency is a company that gathers this information and sells reports. The balance itself comes from a furnisher, the creditor or debt collector that sends account data to the agency.
A balance can be wrong in several ways:
- It is higher than what is actually owed.
- It is lower than what is actually owed.
- It appears on an account that was paid or settled.
- It sits beside a wrong credit limit, which changes how much of the available credit appears to be in use.
The Consumer Financial Protection Bureau lists accounts with an incorrect current balance and accounts with an incorrect credit limit among common errors.
This kind of inaccuracy is what the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., was written to address. In 15 U.S.C. § 1681, Congress found that "inaccurate credit reports directly impair the efficiency of the banking system." The FTC notes that a credit report can affect borrowing, insurance, a job or renting a home. How much a particular balance matters depends on the report and on whoever is reading it.
Why Balances Are Sometimes Reported Incorrectly
A wrong balance can have several causes.
- Timing. A furnisher sends updates to the agencies on its own schedule, so a recent payment may not show up yet.
- Data-entry or transmission errors. The furnisher can make these when it records or sends the account data.
- A mixed file. The CFPB describes a mixed file as a credit file that combines two consumers' information, often because they share the same or a similar name.
- Identity theft. An account the consumer never opened can carry a balance of its own.
- Stale status. An account can keep showing an old balance after a payoff, a settlement or a charge-off if its status was never updated.
The law puts accuracy duties on both sides. Under 15 U.S.C. § 1681e(b), an agency preparing a report "shall follow reasonable procedures to assure maximum possible accuracy." Under 15 U.S.C. § 1681s-2(a)(1)(A), a furnisher may not report information it "knows or has reasonable cause to believe" is inaccurate. A furnisher that clearly and conspicuously specifies to the consumer an address for notices is not subject to that subparagraph (15 U.S.C. § 1681s-2(a)(1)(C)); it may not furnish information that it has been notified at that address is inaccurate if the information is in fact inaccurate (15 U.S.C. § 1681s-2(a)(1)(B)). Under 12 C.F.R. § 1022.42(a), a furnisher must keep reasonable written policies on the accuracy of what it reports.
Each nationwide agency keeps its own separate file, and a furnisher may report to one, two or all three. That is why an error can appear on one report and not on the others.
How to Get Your Credit Reports and Check the Balance Entry
Reports from all three agencies are available through AnnualCreditReport.com. According to the FTC's guidance on disputing errors, the three bureaus have permanently extended a program that lets consumers check each report once a week for free there.
Comparing all three reports matters because a furnisher may report to only some of them. For each entry, a consumer can compare:
- the account name and account number
- the reported balance and the credit limit
- the payment history
- the account status, such as open, closed or paid
Documents help show the gap between the report and the actual account. Common examples are account statements, payment confirmations, payoff or settlement letters, and letters to and from the creditor.
The CFPB's page on disputes says a mailed dispute can include copies of the documents that support the consumer's position, not the originals. It can also include a copy of the report with the disputed items circled or highlighted.
The FCRA Dispute Process: What the Law Requires
The reinvestigation duty sits in 15 U.S.C. § 1681i(a)(1)(A). A reinvestigation is the agency's second look at an item after a consumer challenges it. When a consumer disputes "the completeness or accuracy of any item of information" in the file, the agency "shall, free of charge, conduct a reasonable reinvestigation." It must finish within 30 days of receiving the dispute, either recording the item's current status or deleting the item.
That 30-day period may be extended by up to 15 more days if the consumer sends relevant information during the first 30 days. The extension does not apply if, within those 30 days, the item is found inaccurate or incomplete, or the agency determines it cannot be verified.
Under 15 U.S.C. § 1681i(a)(2), the agency must notify the furnisher within 5 business days and pass along all relevant information the consumer sent. The furnisher then has duties of its own under 15 U.S.C. § 1681s-2(b). It must:
- investigate the dispute
- review what the agency sent
- report the results to the agency
- if it finds the information incomplete or inaccurate, report that to all other nationwide agencies it furnished the information to
- if an item is found inaccurate or incomplete or cannot be verified, promptly modify it, delete it or permanently block its reporting, as appropriate
It must complete all of this before the period under 15 U.S.C. § 1681i(a)(1) in which the agency must act expires.
Under 15 U.S.C. § 1681i(a)(5)(A), an item found "inaccurate or incomplete" or that "cannot be verified" must promptly be deleted or modified.
One exception applies. Under 15 U.S.C. § 1681i(a)(3), an agency may end a reinvestigation if it reasonably determines that the dispute is "frivolous or irrelevant," including by reason of a failure to provide sufficient information to investigate. It must then notify the consumer not later than 5 business days after making that determination; the notice must include the reasons and identify any information required to investigate the disputed information.
A consumer may also dispute directly with the furnisher. Under 12 C.F.R. § 1022.43(a)(2), a furnisher generally must investigate a direct dispute about the terms of an account, including the "principal balance." That duty applies only if the consumer submits a dispute notice to the furnisher at an address the rule lists and the notice contains the information the rule requires (12 C.F.R. § 1022.43(c)-(d)). The CFPB's dispute guidance says the nationwide credit reporting companies can be contacted online, by mail or by phone, and gives each one's online, mail and phone dispute options. It describes furnisher disputes sent in writing by certified mail.
What Happens After a Dispute Is Filed
Once a dispute reaches an agency, the agency notifies the furnisher, the furnisher investigates, and the results go back to the agency. The FTC says the agency must give the consumer the results in writing. If the dispute leads to a change, the agency must also provide a free copy of the report, and that copy does not count as the consumer's free annual report.
A dispute can end in one of these ways:
- Corrected. The balance is changed to the right amount.
- Deleted. The item is removed from the file.
- Verified. The furnisher says the item is accurate, and nothing changes.
- Statement added. If the result stands, the CFPB says the consumer can ask the agencies to include a statement explaining the dispute. That statement goes to whoever requests the report in the future.
A dispute does not always lead to a correction.
Deleted items carry protection against coming back. Under 15 U.S.C. § 1681i(a)(5)(B), an agency may not reinsert a deleted item unless the furnisher certifies it is complete and accurate. If the item is reinserted, the agency must tell the consumer in writing within 5 business days.
For someone who has already sent documents and still sees the same number, the CFPB notes that a consumer can submit a complaint with the CFPB.
What the FCRA Makes Potentially Available When Errors Persist
Liability under the FCRA turns on two things: whether a requirement was broken, and how. An agency that does not conduct a reasonable reinvestigation may violate 15 U.S.C. § 1681i(a)(1)(A). Whether any company violated the Act depends on the facts, including what the dispute contained and what each company did with it. For furnishers, 15 U.S.C. § 1681s-2(c) provides that, with a stated exception, 15 U.S.C. §§ 1681n and 1681o do not apply to a violation of 15 U.S.C. § 1681s-2(a), and 15 U.S.C. § 1681s-2(d) leaves those violations to enforcement by the federal agencies and officials and the State officials the Act identifies. The limit in 15 U.S.C. § 1681s-2(c) does not name 15 U.S.C. § 1681s-2(b).
Under 15 U.S.C. § 1681n(a), a person who "willfully fails to comply" may be liable for any actual damages, or "damages of not less than $100 and not more than $1,000." The court may also allow punitive damages. In a successful action, the person may be liable for costs and reasonable attorney's fees.
Under 15 U.S.C. § 1681o(a), a person who is "negligent in failing to comply" may be liable for actual damages, plus costs and reasonable attorney's fees in a successful action.
Under 15 U.S.C. § 1681n(c) and 15 U.S.C. § 1681o(b), on a finding that an unsuccessful pleading, motion or other paper filed in connection with an action was filed "in bad faith or for purposes of harassment," the court "shall award to the prevailing party attorney's fees reasonable in relation to the work expended in responding" to it. Whether any remedy is available in a given situation depends on its facts.
The page on consumer lawsuits under federal law explains how claims like these are brought.
If You'd Like a Consumer Rights Case Review
A wrong balance that survives a dispute raises different questions than one that was simply slow to update. Those questions include what the dispute said, what the agency and furnisher sent back, and whether a deleted item reappeared. This page does not cover background-check errors, debt collection disputes or full identity theft recovery, which are separate topics; the consumer rights attorney overview touches on each.
A request for a consumer rights case review about a credit reporting error can be made through Federal Consumer Rights.
