Credit Deja Vu: When Negative Information Keeps Showing Up on Your Credit Report

In the midst of trying to get a home loan, a panicked consumer reached out for help about a negative account that reappeared on her credit reports. “Kalina” wrote:

If I disputed a collection and it got removed last year can it go back on my report?…I’m trying to buy a house and I was told to take a few items out of dispute and pay some. So maybe by paying some debt the others are finding out and trying to get in there to get paid ? Even if it was deleted? Please help I feel like instead of helping my credit score I’m messing it up.

Under the Fair Credit Reporting Act, there are specific procedures a credit reporting agency must follow before “reinserting” negative information that has been removed from a consumer’s credit report following a dispute. Specifically, the FCRA says:

The information may not be reinserted in the file by the consumer reporting agency unless the person who furnishes the information certifies that the information is complete and accurate.

In addition, the consumer reporting agency is required to send the consumer written notification within five business days that the information has been reinserted and provide contact information for the company that furnished the information. And they are required to “maintain reasonable procedures designed to prevent the reappearance in a consumer’s file, and in consumer reports on the consumer, of information that is deleted.”

But does this actually happen? Not always. “In the reinsertion cases I’ve handled, all of which settled well, the furnisher did not provide the certification and the bureau did not notify the consumer,” says consumer law attorney Robert Brennan, founder of SoCalCreditDamage.com.

When Old Debts Change Hands

There’s yet another reason why an account that was removed from a consumer’s credit report gets re-reported, and it has to do with the way debts are often sold. Sometimes a disputed debt is sold to another collection agency and pops up again as a new collection account. That’s what happened to our reader, who wrote:

I have a collection that isn’t mine on my credit, I was part of a credit merge in 2008 and slowly I am getting it resolved. Anyway, I have had this collection taken off (because it wasn’t mine). Then about 3 months later it popped back on through a different collection agency. I had that one removed and again a few months later it popped back on. I am now on the 4th company reporting this collection in a year and a half. Every time I have it removed, it’s not as easy as reporting it as “not mine”; I have to send in paperwork and fill out paperwork and jump through hoops.

A single debt may be reported numerous ways, and that’s especially true of collection accounts, which may change hands a number of times. “The debt could be bought or sold,” says Jake Halpern who researched the collection industry for his recent book Bad Paper: Chasing Debt from Wall Street to the Underworld. “The amount changes because there is interest that accrues. The name of the creditor changes because the debt has been bought or sold or the bank may be bought or sold. It’s utterly confusing.”

In these situations, he points out, it can be difficult for even the credit reporting agency to know the same debt is being re-reported. “There is no identifier on the debt,” he says.

Indeed, David Blumberg, public relations director for TransUnion says that while the credit reporting agency employs procedures designed to prevent deleted information from reappearing on a consumer’s credit report, it is possible that “data potentially could reappear if the account were to be transferred or sold to another company (such as a collections agency) who subsequently reports the information to us without providing us sufficient information to recognize the account is the same account we previously deleted.”

You Have Rights

What can consumers do if an item removed after a dispute reappears on their credit reports? One option, of course, is to dispute it again. If the consumer kept the letter confirming the first deletion, it should be pretty easy to supply that as proof.

Another option is to get help from a consumer law attorney. “This is particularly important for items they have previously successfully disputed,” say Brennan. “If they dispute, and the item is blocked, then reinserted without notification, I argue that there is no need to re-dispute. It was already disputed once. If the bureau does provide notification within the five business days, then it is probably good form to re-dispute.”

Another option would be to file a complaint with the Consumer Financial Protection Bureau.

If a disputed debt shows up on the report as a new debt (under a different collection agency or creditor name), consumers can first try disputing the new account, and if that doesn’t work, contact a consumer law attorney or regulatory agency.

“Unscrupulous debt collectors know that changing account numbers or dates on a debt tradeline can fool the credit bureaus and result in the negative tradeline continuing on the consumer’s report for years after it should have come off,” according to Brennan. “Under federal law and laws available in most states, you would have immediate legal rights against the unscrupulous debt collector.” He adds that you may also have rights against the credit reporting agencies that report that account.

What You Don’t Know Can Hurt You

Of course you won’t know if an item has reappeared on your credit reports unless you are monitoring your credit, or you are turned down or charged more for credit or insurance due to the mistake. Most of us would want to avoid the latter situation! So make sure you get your free credit report once per year (at a minimum) from each major credit reporting agency. You can use free credit monitoring to keep tabs on changes in your credit scores, and you can use a free service like Credit.com to see your credit scores every month.

“Bottom line is, once a debt comes off of your credit report, no furnisher, creditor, debt collector or credit bureau is legally allowed to reinsert is, or disguise it and re-report it, without notifying you and giving you the opportunity to contest it,” say Brennan. “If you fall victim to this conduct, you can not only get your credit report cleansed of the false information, but you are also likely entitled to monetary damages.”