Dates or dashes. What do they mean and how are they to be used in a consumers’ credit report? The Court of Appeals for the Seventh Circuit has affirmed a ruling for a defendant — one of the credit reporting agencies — that was sued for violating the Fair Credit Reporting Act because it allegedly reported inaccurate late payments on the plaintiff’s credit report, although a dissenting opinion argues that the majority overlooked and misunderstood “critical” evidence and speculated in favor of the defendant.
The Background: The plaintiff fell behind on her mortgage and negotiated a short sale of her house to settle her debt. Four years later, she applied for a new mortgage and was turned down based on a tri-merge report that aggregated data from all three credit reporting agencies.
- Before applying for the mortgage, the plaintiff noticed that her closed mortgage account was being reported on her credit report as being at least 90 days delinquent. The plaintiff disputed the debt with the defendant on several occasions. The defendant submitted an Automated Consumer Dispute Verification (ACDV) form to the mortgage servicer to confirm the information was accurate, which the servicer did. On one occasion, the servicer updated the plaintiff’s records to include dashes in the account history for all months after December 2015, when she became 90 days delinquent on her mortgage. The dashes meant no reporting for all months following the short sale.
- In its file, though, the defendant replaced the dashes with dates.
- When the plaintiff’s mortgage application was turned down, it was because her student loan obligations made her debt-to-income ratio unacceptably high. The adverse action letter the bank sent to Frazier also indicated the loan was denied due to “Excessive obligations” and “Insufficient income for total obligations.”
- The plaintiff filed separate lawsuits against the mortgage servicer, the defendant, and the company that aggregated the tri-merge credit report. A District Court judge in this case granted summary judgment for the defendant.
The Ruling: Ultimately, the defendant can not be held liable for a report that was prepared by a third party and sent to a financial institution, the Appeals Court ruled. On top of that, the mortgage application was not denied because of delinquency history in the plaintiff’s credit report.
- But, if the information in the first link of the chain — from the mortgage servicer to the defendant — and the information in the last link of the chain — from the aggregator of the tri-merge report to the bank taking the mortgage application — was accurate, the issue had to be in the middle link of the chain, between the defendant and the aggregator, wrote Judge Hamilton in a dissenting opinion.
- “The question is whether Equifax sent bad information to CreditLink or whether CreditLink made a mistake with accurate information,” Judge Hamilton wrote. “Equifax cannot tell us. It did not keep a record of the information it sent to CreditLink. And given this gap in the evidence, it is difficult to understand how the district court granted summary judgment on the theory that the information ‘furnished and reported by Equifax … was all true’ and that there was ‘no inaccuracy in Equifax’[s] report.’ The district court simply did not have such information, let alone evidence making this point undisputed.”
