When Your Creditor Gets It Wrong

Some credit report errors involve accounts that are not yours at all: a stranger’s debt merged into your file, or a fraudulent account opened by an identity thief. Those problems are covered on our pages about mixed credit reports and identity theft and your credit report. This page addresses a different category of error: inaccurate information on accounts that legitimately belong to you.

You have a credit card, an auto loan, a mortgage, or another account that you opened and that is rightfully part of your credit history. But the information the credit bureaus are reporting about that account is wrong. For example:

• The balance does not match what you actually owe.
• A payment you made on time is reported as late.
• An account you settled shows as unpaid.
• A charge-off appears with the wrong date or the wrong amount.
• A repossession is reported on a loan that was current.

A Federal Trade Commission study found that one in five consumers had a potentially material error on at least one of their credit reports. Many of those errors involve this kind of inaccurate account information: not someone else’s data on your file, but your own accounts reported incorrectly by creditors and servicers who should know better.

These errors are not cosmetic. A single misreported late payment can drop your credit score by 100 points or more. A false charge-off signals serious default regardless of whether you still owe the debt or paid it long ago. An incorrect balance distorts your credit utilization ratio. The downstream effects are concrete: loan denials, higher interest rates, rejected rental applications, and increased insurance premiums, all caused by information that your creditor or the credit bureau got wrong.

If you have disputed inaccurate account information and the credit bureaus or your creditor have refused to correct it, you may have a legal claim under the Fair Credit Reporting Act (FCRA). For a broader overview of credit reporting errors and your rights, see our credit report errors hub page.

Common Types of Inaccurate Account Information

Account information errors take many forms. Some involve a single data point reported incorrectly. Others reflect a systemic failure by a creditor or servicer to update records after a payment, a settlement, or a change in account status. Common types of credit reporting errors involving otherwise bona fide accounts include:

Errors About Whether You Paid or When You Paid

Credit reports track payment history using 30-day increments: 30 days late, 60 days late, 90 days late, and so on. A charge-off notation means the creditor has written off the debt as a loss for accounting purposes, which typically follows a prolonged period of nonpayment. These are among the most damaging marks on a credit report, and when they are wrong, the harm is both real and undeserved.

Entries regarding late payment or no payment are inaccurate in many situations. Here are some examples of this type of problem:

• A payment was made on time but posted late because of a processing delay on the creditor’s end.
• A payment was applied to the wrong account.
• The creditor agreed to a forbearance, deferment, or modification and then reported the consumer as delinquent during the protected period.
• An autopay arrangement failed due to a system error on the creditor’s side and the missed payment was reported before the consumer had any opportunity to cure it.
• A charge-off is reported on an account that was never delinquent.
• An account that was settled or paid in full continues to show as unpaid.

Errors About When a Default Occurred

The FCRA limits how long most negative information can remain on a consumer’s credit report: generally seven years from the date of first delinquency, meaning the date the account first went past due on the path to the current negative status. That date determines when the information must be removed, and it should not change regardless of whether the account is later sold to a collector, settled, or paid.Reaging occurs when a creditor or debt collector improperly resets this date to make an old debt appear newer. A collection agency that purchases a charged-off account and reports it with its own acquisition date as the start of the delinquency, rather than the original date of first delinquency, has reaged the account. So has a creditor that updates the delinquency date after a settlement, a partial payment, or a failed payment plan.

Reaging is a particularly harmful form of inaccurate reporting because it extends the time negative information stays on the consumer’s credit report, sometimes by years. If a charge-off or collection on your report appears to have a more recent date of first delinquency than the original, that is a reportable inaccuracy that may violate the FCRA.

Errors About How Much You Owe

Sometimes the issue is not about whether you were ever late, or when you were late, but about how much you owe. A wrong balance inflates your total reported debt, distorts your debt-to-income ratio, and can trigger automatic denials for mortgages, auto loans, and other credit.

Here are a few examples of how this type of “wrong balance” problem may occur:

• An account settled for less than the full amount should show a zero balance, but many creditors continue reporting the pre-settlement balance or the original charged-off amount.
• A paid-off loan may continue to show an outstanding balance because the creditor failed to update its reporting.
• A deficiency balance after a vehicle repossession may fail to credit the consumer for the proceeds from the sale of the vehicle.
• A credit limit may be reported incorrectly, which directly affects the credit utilization ratio, one of the most heavily weighted factors in credit scoring.

Schlanger Law Group currently represents the plaintiff in a class action alleging that Trans Union improperly reports optional auto lease buyout amounts as balloon payments, inflating consumers’ reported debt by thousands of dollars. In Sessa v. Trans Union, LLC, the consumer’s lease gave her an option to purchase the vehicle at the end of the lease term for its residual value. Trans Union reported that optional buyout amount as a required lump-sum debt obligation. The district court dismissed the case, but we appealed, and the United States Court of Appeals for the Second Circuit vacated the dismissal, holding that the FCRA does not distinguish between “legal” and “factual” inaccuracies and that any objectively and readily verifiable inaccuracy can form the basis of an FCRA claim. The Consumer Financial Protection Bureau and the Federal Trade Commission both filed briefs supporting our position; the U.S. Chamber of Commerce opposed it. The Second Circuit ruled in our favor.

How Account Information Errors Happen

Account errors are seldom random. Here are the most common scenarios associated with account errors:

Errors Related to Servicer Transfers

When your loan is sold or reassigned from one company to another, the old servicer must close its reporting and the new servicer must pick up the account history accurately. In practice, payments made during the transition period are frequently reported as missed because the new servicer’s system does not yet reflect the payment history from the old servicer. Account data can be lost, duplicated, or incorrectly mapped during the transfer. These problems are especially common with mortgage loans and student loans, where servicer transfers have occurred on a massive scale. For more on how servicer transfers create student loan credit reporting errors specifically, see our page on student loan credit report errors.

Errors Related to Forbearance, Repayment, and Loan Modification Agreements

Consumers who enter forbearance, deferment, or loan modification agreements expect that complying with the terms will protect their credit. It often does not. Creditors and servicers agree to modified payment terms but fail to update their reporting systems to reflect the new arrangement. The result: a consumer who entered forbearance in good faith and held up their end of the agreement is reported as delinquent for months they were not required to pay. A loan modification reduces the balance owed, but the creditor continues reporting the pre-modification amount. These errors reflect a disconnect between what the creditor’s customer-facing operations agree to and what the creditor’s automated reporting system actually sends to the bureaus. For more on this problem, see our article on forbearance and credit reporting.

Errors Related to Bankruptcies

Debts that have been discharged in bankruptcy should be reported with a zero balance and a notation that the debt was included in a bankruptcy. In practice, creditors frequently continue reporting a balance owed, continue reporting the account as delinquent, or fail to update the account status after the discharge order is entered. Some creditors sell discharged debts to collection agencies, which then report the same debt as a new, active collection, compounding the error.

Errors Related to Failure to Process Timely Payments

This type of error occurs when a consumer makes a payment on time, but the creditor’s system does not post it by the reporting cutoff date, applies it to the wrong account, or processes it as a partial payment. The credit report then shows a late payment or a higher balance than the consumer actually owes. Autopay failures caused by the creditor’s own system errors fall into this category as well: the consumer set up automatic payments, the system failed to execute the payment, and the missed payment was reported before the consumer knew anything had gone wrong.

Errors Related to Auto Lending

Schlanger Law Group regularly represents victims of inaccurate credit reporting related to auto loans and leases, which are especially prone to errors. Some examples include:

• Improper lease-end charge-offs.
• Deficiency balances that fail to credit the proceeds from a vehicle sale.
• Lease terms fundamentally mischaracterized in ways that inflate the consumer’s reported debt, as in Sessa v. Trans Union.
• Improper addition of a family member as a co-borrower.

Auto loan cases often involve violations of multiple statutes in addition to the FCRA. For more on your rights when a company repossesses a vehicle improperly, see our article on protecting consumers from illegal auto repossession.

Duplicate Account Reporting

The same debt appears on a credit report more than once, most commonly when an original creditor reports an account as delinquent and then sells or assigns the debt to a collection agency, which reports the same debt as a separate tradeline. Both tradelines remain on the report, effectively doubling the reported delinquent debt. Duplicates also arise during servicer transfers and system migrations, when accounts are split, merged, or reassigned without properly closing the old tradeline.

Why the Dispute Process Often Fails

Many consumers attempt to fix inaccurate account information by filing disputes directly with the credit bureaus. This is the right first step, and it is a necessary one: the dispute triggers the legal obligations described below. But for many consumers, the dispute does not produce a correction. The bureau’s automated system, e-OSCAR, compresses your dispute into a standardized code and limited text field, and the furnisher’s “investigation” typically consists of checking whether your credit report matches its own internal records. When the problem is that those internal records contain the error, the verification is circular: the furnisher confirms its own mistake and reports back “verified.”

We recommend filing written disputes by certified mail rather than using online dispute portals, which may restrict the information you can provide and limit your legal options. If a dispute succeeds but the furnisher does not update its own system, the same incorrect data will reappear in the next reporting cycle. Each recurrence should be documented and disputed again in writing; the pattern of repeated failures strengthens a legal claim. For step-by-step guidance, see our guide to disputing credit report errors.

Your Rights Under the FCRA

The Fair Credit Reporting Act (FCRA) imposes obligations on both the companies that furnish your account data and the credit bureaus that publish it. In many inaccurate account information cases, the error originates with the furnisher, but as Sessa v. Trans Union demonstrates, the credit bureau’s own reporting can also be the source of the problem. Both are potentially liable under the FCRA.

The key provisions are § 1681s-2(b), which requires furnishers to conduct a reasonable investigation after being notified of a dispute; § 1681i, which requires credit bureaus to conduct a reasonable reinvestigation within 30 days; and § 1681e(b), which requires credit bureaus to follow reasonable procedures to assure the maximum possible accuracy of consumer reports. In Sessa, the Second Circuit confirmed that § 1681e(b) reaches any objectively and readily verifiable inaccuracy, whether characterized as “factual” or “legal” in nature.

If these obligations are violated, the FCRA provides for actual damages, statutory damages, punitive damages, and attorney’s fees paid by the defendant. For a more detailed discussion of your FCRA rights and available remedies, see our credit report errors hub page and our article on FCRA damages.

Depending on the type of account involved, other federal statutes may also apply. Mortgage servicing errors, for example, may give rise to claims under the Real Estate Settlement Procedures Act (RESPA), which imposes separate obligations on mortgage servicers to respond to borrower inquiries and correct errors. For more on how the FCRA and RESPA work together in mortgage cases, see our article on forbearance and credit reporting.

How Schlanger Law Group Can Help

Schlanger Law Group is a consumer protection firm focused on credit reporting and identity theft. The firm focuses on zealous and sophisticated federal litigation on behalf of victims of credit reporting inaccuracies and unauthorized charges, and has been representing consumers since 2007.

Inaccurate account information claims, including auto lending cases, furnisher liability cases, and charge-off and late payment disputes, are a regular part of our practice. We have litigated against credit bureaus, national banks, auto lenders, and mortgage servicers on behalf of consumers whose account information was reported inaccurately and who were unable to get the errors corrected through the dispute process. In Sessa v. Trans Union, we successfully reversed a district court dismissal at the Second Circuit in a class action involving inaccurate auto lease reporting, with the support of the CFPB and FTC as amici.

Although every case is different and no outcome can ever be guaranteed, Schlanger Law Group has regularly achieved outstanding, six-figure settlements for clients harmed by credit reporting errors. For more on our firm’s track record, see our case results page.

We typically represent victims on a contingency fee basis and handle cases nationwide. If your credit report contains inaccurate account information that the credit bureaus or your creditor have refused to correct, contact us today to discuss your options. You can also learn more about what an FCRA lawyer does and how we approach credit reporting cases.

Frequently Asked Questions About Inaccurate Account Information

How do I remove a late payment from my credit report?

If a late payment on your credit report is inaccurate, you have the right to dispute it. Submit a written dispute to each credit bureau reporting the error, with supporting documentation such as bank statements or creditor correspondence. For step-by-step guidance, see our guide to disputing credit report errors. If the dispute does not result in a correction, or if the late payment reappears after being removed, you may have a legal claim under the FCRA.

How do I remove a charge-off from my credit report?

If a charge-off is reported inaccurately, whether the balance is wrong, the date is wrong, or the charge-off should not have been reported at all, you can dispute it with the credit bureaus. No one can legally remove an accurate charge-off before the seven-year reporting period expires. But if any element of the charge-off reporting is inaccurate, you have the right to demand correction. Our dispute guide walks through the process. If your dispute is denied and the information is genuinely inaccurate, an FCRA attorney can evaluate whether you have a legal claim against the furnisher or the credit bureau.

Can I sue for inaccurate credit reporting?

Yes. The FCRA gives consumers a private right of action to sue both credit bureaus and furnishers in federal court. For inaccurate account information, the most common legal theory is that the furnisher failed to conduct a reasonable investigation after being notified of your dispute and improperly verified the incorrect information instead of modifying or deleting it (§ 1681s-2(b)), and that the credit bureau failed to conduct a reasonable reinvestigation (§ 1681i). If you prevail, the FCRA provides for actual damages, statutory damages, punitive damages, and attorney’s fees paid by the defendant.

How long does a charge-off stay on your credit report?

Under the FCRA, a charge-off can remain on your credit report for seven years from the date of first delinquency that led to the charge-off. That date should not change regardless of whether the account is sold to a collector, settled, or paid in full. If a creditor or collector reports a charge-off with a more recent date of first delinquency than the original, that is reaging, and it is a form of inaccurate reporting that may violate the FCRA.

What is wrongful repossession?

Wrongful repossession occurs when a lender or its agent repossesses a vehicle without legal justification: the loan was current, the consumer had reinstated the loan, or the repossession violated state-law procedural requirements. Beyond the repossession itself, the credit reporting that follows is often inaccurate, showing wrong dates, wrong balances, or a negative account status that does not reflect the actual history of the account. Consumers who have experienced a wrongful repossession may have claims under both the FCRA (for inaccurate credit reporting) and other consumer protection statutes. For more, see our article on protecting consumers from illegal auto repossession.

What can I do if my credit report shows the wrong balance?

Start by gathering documentation that shows the correct balance: your most recent account statement, a payoff confirmation letter, or a settlement agreement. Then submit a written dispute to each credit bureau reporting the incorrect balance, including copies of your documentation. Send disputes by certified mail. If the bureau does not correct the balance after investigation, or if the wrong balance reappears on a subsequent report, contact an FCRA attorney to evaluate whether you have a legal claim.

If your credit report contains inaccurate account information that the credit bureaus or your creditor have refused to correct, contact Schlanger Law Group for a free consultation.