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Advice on Compensation for Creditor Error

Can I sue a creditor for compensation for a reporting error on their part?

Hi there, I have recently had an application for a credit card refused. I have never previously been refused any application for credit. I have only ever missed one payment on any loan or credit card. This was because my bank did not process a telephone banking payment. The bank admitted the error and paid me compensation. I have just received a letter from Orange demanding a payment for a broadband account which was closed in June. My bank have confirmed that Orange cancelled the Direct Debit agreement on 04/06/08. I had been advised by Orange that I did not need to contact the bank as they would do whatever was neccessary. Any payment now overdue is a result of an administrative error by Orange. I believe that my application for the credit card has been refused because Orange are showing that I am in default on whatever Credit Reference Agencies they use, because of their error. Am I entitled to seek compensation from Orange for the effect their error has had on my current application and for any problems this may cause me in the future?

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Bill's Answer
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The first thing that you need to do in this situation is to obtain a copy of your credit report to determine if the Orange account is even appearing on your credit report, and if it is, what information it is reporting. Since you are a customer of Orange, I assume that you live somewhere in the EU; though I am not very familiar with the credit reporting systems outside of the United States, my understanding is that they are somewhat similar to those in the States. For example, Experian, one of the largest credit bureaus in the United States (often called “credit reference agencies” outside the US), also operates in many European countries, including the UK (www.Experian.co.uk), Germany, and France. What information can be provided to the credit agencies, and what information they are required to provide to consumers, is regulated by various laws in each country, so it is important that you research your countryÂ’s laws regarding credit reporting and disputing inaccurate credit information. For general information about credit, credit reports, and credit scoring, you can visit the credit section on Bills.com.

After obtaining a copy of your credit report, if you determine that Orange is reporting erroneous information about your former account, you should contact Orange to try to have the information corrected. You may find that you do actually owe Orange some money for past services; the fact that Orange did not debit your bank account as you had instructed them does not mean that they are not entitled to payment for their services. I certainly understand your frustration with the fact that Orange did not follow up on its assurance that it would take the necessary steps to secure payment from your bank; however, you will likely still need to pay any past-due balance if you wish to resolve this situation and have the negative credit listing removed from your credit profile. I would recommend that you speak with Orange and offer to pay the amount owed if they will remove the delinquent credit listing from your credit report. Hopefully, in light of its apparent failure to properly close the account, Orange will be willing to work with you to resolve this situation in an amicable manner.

Even if Orange is not willing to help you by removing this listing from your credit reports, you will likely still want to pay the past due amount to prevent the account from continuing to show as a delinquent item on your credit profile. Each month that this account goes unpaid, it is likely causing more damage to your credit score. Once you have resolved the past due balance with the Orange, you should be able to dispute the listing with any credit bureau that is reporting the account as delinquent. I would encourage you to obtain a copy of your credit report from each of the major credit reference agencies in your country to determine to which agencies Orange has reported this derogatory information. The credit agencies should be able to tell you how to dispute items on your credit reports. The U.S. Federal Trade Commission offers a guide to disputing credit report errors, which is available at www.ftc.gov; while I know that the same procedures may not apply in your country of residence, this website should offer some general guidance in how erroneous credit information can be challenged.

As for pursuing Orange for compensation for the fact that its reporting erroneous information led to your being denied credit, you will likely be facing a rather steep uphill battle. Credit scoring is very complicated calculation, and it may be difficult to prove that the information reported by Orange is what lowered your credit score. Also, there are innumerable reasons that you could have been denied credit, not just the fact that your credit score may have dropped slightly; for example, the lender could have denied you because you do not make enough money, or you do not have sufficient assets, or you have too much debt already, and so on. I know that you think that the reason that you were denied credit was due to the information reported by Orange, and you are probably correct; however, proving it may be very difficult, if not impossible. Finally, in order to receive compensation, you must generally be able to prove that you suffered damages because of the tortfeasorÂ’s actions; it may be difficult to prove any actual damages based on the denial of your application for a new credit card. However, I am not licensed to practice law in your jurisdiction, so I strongly advise to consult with a qualified solicitor in your area if you are considering filing a lawsuit against Orange for their actions in this case.

I wish you the best of luck in resolving this situation, and hope that the information I have provided helps you Find. Learn. Save.

Best,

Bill

www.Bills.com/

2 Comments

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  • BA
    Feb, 2010
    Bill
    See the Bills.com resource Charge Off and Credit Reporting Inaccuracies to learn more about your options.
    0 Votes

  • 35x35
    Feb, 2010
    Fred
    I had a JcPenny's account that they charged off stating I filed for bankruptcy (which I never did. I've called them trying to resolve this however they stated that since it was charged off they could do nothing more. I since have contacted by a collection agency trying to collect this bill.What do I do?
    0 Votes