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If you have a client who is dealing with mixed credit file issues, you need to act immediately. A mixed credit file can cause many problems for your client, including difficulty in obtaining loans or mortgages. In this blog post, we will discuss what a mixed credit file is and how lawyers can help their clients deal with the problem.

What is a mixed credit file?

A mixed credit file is a credit report that contains information from two consumers and combines them into a single credit report. Let's say you have a client named "Sally Emily Smith." Sally's credit SHOULD be stellar (she's paid her bills like clockwork every month, doesn't get overextended, and has no collections or other negative account "tradelines" on her file. But then comes the day that Sally's got a contract on her dream house and gets turned down for a mortgage when her credit score (which should be around 800) comes back at 560, with four charged-off accounts, a delinquent mortgage, and 3 collections. So, what gives?

How do mixed files happen?

Turns out, the information on Sally's credit report is not just "hers." Some of it belongs to another consumer who "looks" to the Credit Reporting Agencies (or their computers, really) like Sally. This can happen for all sorts of reasons: similar names (“Sally Evelyn Smith), Jr.'s and Sr. confusion, similar or identical dates of birth, similar addresses, or social security numbers that are just one or two numbers apart. (Identity Thefts can cause the same type of problems but that's a blog post for another day).

While credit reports can be "mixed" or merged for some of the above reasons, sometimes you can't figure out any connection between the two consumers. That's because what's really going on is something called "over-inclusiveness." Credit reporting agencies like Equifax, Trans Union and Experian make their money by selling a LOT of information. So much so that getting "more" information into a credit file can take precedence over getting "correct" information into a file. So, when that Belk account "looks" like Sally's (same date of birth, same state, similar name) it can wind up in her credit file.

Can disputes sometimes make things worse?

This sucks bad enough for Sally, who can’t get her mortgage.  She can – and SHOULD – make written disputes to the credit reporting agencies.  (Pro Tip – never do this online).  But while necessary and sometimes helpful, disputes can sometimes actually make things worse.   Here’s how- -- when Sally sends in her dispute to the credit reporting agency, she will naturally include her correct address and other information.  The credit reporting agency must send that dispute (usually through a system called e-Oscar) to the creditor or collector reporting it.  Sometimes that creditor or collector has a DIFFERENT address and other information for Sally (because it’s not really Sally on the account).  But rather than telling the credit reporting agency to delete the account, instead the creditor or collector will use Sally’s true information to “update” its records.  (Now this account really looks like your Sally’s).  A few weeks later, Sally gets her dispute results back from the credit reporting agency, opens the envelope, and her heads explodes in disbelief to read that the credit reporting agency has “verified” that she owes the account.

What the FCRA really requires.

What the Fair Credit Reporting Act demands of credit reporting agencies, however, is not inclusiveness, but ACCURACY. Under the Fair Credit Reporting Act (FCRA) credit reporting agencies must use "reasonable procedures to assure maximum possible accuracy." As the CFPB and FTC have found repeatedly, though, they do not.

It’s complicated though, so call us.

While the FCRA is helpful, it’s also something of a minefield for lawyers.  Disputes must be handled correctly, and preemption and qualified immunity issues abound.  The good news is we have filed hundreds of FCRA cases, and LOVE cases like these --mixed files -- the very most. If your client (or you -- we've had this happen to lots of our lawyer friends) have what you think may be a mixed file - or any credit reporting issue, please let us know.

It would be our pleasure to make your client’s problem go away.