Faulty Credit Reporting Costs Equifax $3 Million
The foreclosure crisis barreling through the United States has led many families to file for Chapter 13 bankruptcy in an effort to save their homes. The resulting tightening of lending standards has left many more wondering if they'll ever qualify for a home loan.
Since the collapse of the subprime mortgage market, getting a mortgage loan has been more difficult than ever, even with a credit report that's completely accurate. So what happens when your credit report is full of errors-and you can't fix them?
Angela P. Williams, a Florida resident, discovered the answer to that question when several credit reporting bureaus refused to remove incorrect information from her credit report for more than eight years, according to reports.
When Williams realized that credit reporting bureaus were listing incorrect information on her credit reports in 1995, she reportedly took action. But eight years of reaching automated customer-service programs, struggling to prove her identity and seeing no significant change on her reports led her to sue the three credit bureaus in 2003.
Apparently, another woman named Angela Williams, who had a similar Social Security Number, was racking up lots of debt. And Angela P. was paying for it.
Williams filed lawsuits against Equifax, Experian and American Recovery Systems, the credit reporting bureaus that had left her information inaccurate for so many years. Experian and American Recovery Systems settled out of court, but Equifax let the case go to trial.
The jury found in favor of Williams, and awarded her $217,000 in actual damages and $2.7 million in punitive damages. The nearly $3 million marks the greatest amount Equifax has ever been ordered to pay in a consumer case.
Reports note that Equifax will likely appeal the decision. Appeals courts are known for reducing damage amounts, but many who support the jury's decision hope it will stand. If it does, a powerful message will be sent to credit reporting bureaus, which have been target by several lawsuits in the past few years stemming from similar customer complaints.
Experts note that Equifax's automated customer service system played a huge role in Williams' difficulties. The automation is intended to keep costs low and profits high, not to make customer service easier or more efficient.
The court's official ruling was that Equifax was responsible for negligent violation of credit reporting laws, but the actual impact on Williams went well beyond her frustration at seeing incorrect items on her credit report.
Because of the inaccuracies, Williams was reportedly unable to obtain credit cards, ATM cards, student loans, or home loans. She was unable to take classes to get her medical transcriptionist's license because her false credit report made her out to be a huge lending risk.
And mortgages? Even by the lax standards used by some subprime lenders, she didn't qualify for a home loan.
Williams' case illustrates the importance of being proactive in maintaining your credit report. Most errors don't take as long to fix or cause as much damage to overall credit ratings as those on Williams' report did. But keep in mind that you are entitled to one free credit report from each of the major reporting bureaus annually.
If you don't take an active interest in your credit health, it's likely that no one will.