Anyone who saw that their paid-off car loan or lease was “reinserted” onto their credit report and marked as delinquent.
What’s Going On?
Attorneys working with ClassAction.org are investigating whether class action lawsuits can be filed on behalf of consumers who had paid-off car loans reappear on their credit reports.
How Could a Class Action Lawsuit Help?
A lawsuit could help consumers take action to collect damages for losses caused by the error.
Attorneys working with ClassAction.org would like to speak to anyone who paid off their car early only to have the loan reinserted onto their credit report.
They’re looking into whether some lenders are allowing old car loans to reappear on consumers’ credit reports due to avoidable errors in their credit reporting systems. Unfortunately, because payments are no longer being made on these accounts, drivers’ loans may be showing up as delinquent and causing damage to their credit scores.
How Does an Old Car Loan Get Reopened on My Credit Report?
In some cases, when a driver pays off his or her car loan or lease early, the lender may fail to update their system to reflect this fact, causing any scheduled future payments to get marked as late.
Those who notice the error may initiate a dispute to have the information corrected.
Unfortunately for some, however, the creditor has continued to report the account to the credit bureaus as open and delinquent even after the error is fixed, causing the loan to get “reinserted” onto the consumer’s credit report.
Why Does Loan Reinsertion Occur?
Reinsertion typically occurs because a creditor’s system for uploading credit report data is separate from the system use to handle disputes. Because of this, a paid-off loan can be reinserted several times in a nearly endless loop where information is disputed and removed from a credit report, only to appear again later.
Am I Protected Against Loan Reinsertion?
A federal law known as the Fair Credit Reporting Act protects consumers in regard to their credit information and requires that credit reporting agencies maintain reasonable measures to ensure their reports are accurate.
Regarding loan reinsertion, the law also provides that:
A credit reporting agency must maintain reasonable procedures to prevent the reappearance of old deleted loans both in their files and on consumers’ credit reports.
Information deleted from a file cannot be reinserted by a consumer reporting agency unless the person furnishing the information certifies that it is accurate.
If information that was deleted gets reinserted into a consumer’s file, the consumer reporting agency must notify the person in writing no later than five business days after the reinsertion.