California Credit Law Blog

Significant percentages of consumer credit reports include serious errors. What happens if the error is a misinterpretation of a court document? What happens if a consumer settles a dispute in court, but a credit reporting agency instead reports that the consumer has a judgment entered against him? What happens if that error results in credit denials for the consumer?

That happened to Los Angeles resident Jason Dennis, as Molly Selvin reports in today's Los Angeles Times. Mr. Dennis had a dispute with a landlord that resulted in a settlement: he and his landlord agreed that no judgment would be entered if he paid a settlement amount. He paid that amount and the court file showed that the parties filed a Request for Dismissal and that the case was dismissed. No problems, right?

Wrong. When Mr. Dennis tried to get credit to start a new business, he discovered that Experian was reporting a judgment against him--a serious "ding" on anyone's credit report. He disputed with Experian, and asked Experian to fulfill its legal obligation to "conduct a reasonable investigation to determine whether the disputed information was inaccurate." But, even though the court file showed that Mr. Dennis was right, Experian refused to change his report. Worse, after Mr. Dennis sued, the trial court entered judgment in Experian's favor, finding that Experian had met its obligation to reinvestigate.

Yesterday the U.S. Court of Appeal vindicated Mr. Dennis. It reversed the trial court and told it to enter judgment in Mr. Dennis' favor because "no rational jury could find that [Experian] wasn't negligent." The Court said "this case illustrates how important it is for Experian, a company that traffics in the reputations of ordinary people, to train its employees to understand the legal significance of the documents they rely on."

Although this case affects only Mr. Dennis, it sends a hugely important message to Experian and the other credit reporting agencies. We can only hope that they will take the Court's advice and do a better job on consumers' credit reports.

Consumers Union has released a report on the "free" credit reports available on the Internet that are not really free. The study looked at 24 sites were consumers are enticed to obtain free credit reports but only if they agree to pay for their credit scores and other services at the same time. Some sites offer free credit reports and free credit scores, but only if the consumer signs up for a credit monitoring service.

Almost all the sites discouraged consumers from going to annualcreditreport.com, which is the one site where consumers may, once a year, get a free credit report from all three of the major credit bureas.

According to Consumer Reports, very few people need credit monitoring services. Consumers can check with their own credit for free or at low cost by periodically going to the credit bureaus own sites and paying a small fee ($5.95 for Experian and $7.95 for TU and Equifax).

Once a consumer signs up for credit monitoring, it can quite difficult to cancel. In 16 of 18 cases, the consumer has to call someone to cancel after going through an initial sign in process on the site. All to discourage consumers who want to quit.

Turns out Experian and TransUnion between the two of them own 15 of the sites. For example, Experian owns FreeCreditReport.com and TransUnion owns free-creditreports.com

Bottom line--don't go to any site other than annualcreditreport.com and the credit bureaus individual sites (Equifax.com, Experian.com and TransUnion.com).

The California Office of Privacy Protection exists to protect consumers from identity theft. Their site has valuable information for victims of identity theft. For example, one may learn how to "freeze" your credit files. The site provides step by step instructions on how to stop third parties from accessing your credit. The site collects a great deal of information on identity theft as well.