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Rejected for credit? It could be because you're dead

Reporting errors create credit zombies; resuscitation can be slow and painful

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Rejected for a loan because your credit history was shut down? It could be because the credit bureaus think you're dead. 

About 1,000 people per month get mistakenly declared dead by the Social Security Administration every year, according to government estimates. Many more get falsely reported as deceased by their bank, credit card issuer or by one of the big three credit bureaus -- Experian, Equifax or TransUnion.

Credit zombies created when you're falsely reported dead

Often, when victims find out that they have been accidentally declared dead, they assume that proving they're alive and well will be an easy fix. Instead, they find they will have to wait a month or more before lenders will acknowledge their living, breathing, bill-paying status.

Or, in more extreme cases, they're told before 30 days have passed that they must be mistaken. They can't possibly be alive right now because investigators have looked into their case and records show they've passed away.  

"There's a sense of powerlessness, a sense that you are disenfranchised," says James Willis, a journalist and professor based in California who was mistakenly declared dead by Capital One two years ago. Willis had just started a new job and was getting ready to buy a new house when he learned that, according to the credit reporting agency Experian, he had apparently just died.

"The news of my demise came in the form of a credit alert from Experian," Willis recalls. "It said a potentially negative item had just been posted to my credit report."

When Willis followed up, he learned that one of his lenders, Capital One, had written off his charges as uncollectible because they believed that he was dead. Experian then froze his report, shutting out the mortgage company that Willis had enlisted to help him buy his house.

"When a credit card company declares you dead, then they send that notice on to the credit reporting agencies and then your credit history gets locked down," explains Willis. "You cannot access it. Nobody can access it because of the fact they assume you're dead."

At that point, getting mistakenly declared dead shifts from being a minor annoyance to potentially becoming a big and costly problem, says Jim Francis, a consumer lawyer in Philadelphia who has represented multiple clients who have been killed off on paper.

"The real problem with being marked as deceased on a credit account is you can't get a credit score," says Francis. "It's impossible to get credit to the extent that most banks, mortgages, car dealerships require a credit score to assess risk. They have no possibility of getting that and so there's no way of getting credit."

"That's the real problem and the real harm," he adds.  

Getting exhumed takes time
The amount of time it takes for killed-off consumers to be brought back to life can also hurt, say consumer advocates. Credit bureaus have 30 days under the Fair Credit Reporting Act to investigate a credit dispute and verify whether the information they have on file is correct.

I don't think you're dead. I know you're alive but our computer is in control and our computer has 30 days to rectify the situation.

-- Customer service representative
Capital One

However, that's a long time to wait if a consumer is in the midst of applying for a time-sensitive loan, such as a mortgage, or is applying for a job and needs an immediate credit check, says Todd Mark, vice president for education at the Consumer Credit Counseling Service of Greater Dallas. "Those are situations where you don't want to have to wait 30 days or longer for a dispute to be initiated," says Mark.

In the meantime, customer service representatives are rarely able to help speed up the process, which can be frustrating for a consumer who's on a tight deadline, says James Willis, the customer who was accidentally killed off by Capital One.

Short on time and anxious to erase Capital One's mistake, Willis says he spent several hours on the phone, trying to get someone to help him in time to close on his home loan.

However, the staff at Capital One told him there was nothing they could do. Instead, Willis had to wait for the bank's computers to process an investigation into the mistake and report back to the credit bureaus, he says.

"I don't think you're dead," Willis says one customer service representative told him over the phone. "I know you're alive but our computer is in control and our computer has 30 days to rectify the situation."

"That's when it took kind of a leap into the twilight zone for me," says Willis. "Even though the individuals at Capital One believed I was alive, no one seemed to be able to do anything about the computer." 

Eventually, Capital One figured out that it had mixed Willis up with his deceased father, James Willis Sr., and restored his account. However, by that time, Willis had already spent countless hours trying to resuscitate his credit.

"That's what started weighing on me," says Willis of the time spent trying to get the mistake corrected. "I was starting a new job at the time and it was just a lot of time devoted to it, a lot of distraction that was caused by this."

"One of the frustrating things is to try to get them to understand that your time is valuable," he adds.

It may take months -- or years -- to be reborn
Willis was lucky. He was able to get his dispute resolved in less than a month and closed on his house just in time.  However, other consumers have had to wait much longer to get their financial lives back on track.

They tried sending detailed disputes ... And surprisingly, in a bizarre fashion, the credit reporting agency verified them as being deceased.

-- Jim Francis
Consumer lawyer

Jim Francis, the consumer lawyer in Philadelphia, says that many of his clients came to him in desperation after submitting their disputes through the credit reporting agencies' automated dispute process and getting nowhere.

"They tried sending detailed disputes, documentation [saying], 'Here I am. This is my Social Security number. This is obviously not me.' And surprisingly, in a bizarre fashion, the credit reporting agency verified them as being deceased," he says.  

That's when their lives flipped upside down. Not only could they not get credit. They had no idea how long it would take the credit bureaus to figure out the mistake.

ARE YOU A CREDIT ZOMBIE?
WHAT TO DO

If you, too, find that you are having trouble proving to lenders that you're alive, don't panic.

Prepare a detailed notarized dispute for the credit reporting agencies that includes documentation proving you're alive and send it by certified mail, say experts.

Also be sure to send a notarized copy of your dispute and copies of supporting evidence to any furnisher or creditor that you believe may be responsible for the mistake. If you believe the Social Security Administration is responsible for the mistake, contact your local Social Security office directly.

In addition, write down the name and number of anyone you talk to over the phone, including what they promised they would do for you, says Consumer Credit Counseling Service of Dallas's Todd Mark. "Create your own paper trail at home and don't be afraid to step up who you talk to," he says.

If nothing works and your credit information is still shut down, seek legal help. Under the Fair Credit Reporting Act, you are entitled to seek legal action when legitimate errors -- such as being mistakenly declared dead -- aren't corrected in a reasonable period of time.

Finally, don't forget to remain calm, says recently exhumed consumer James Willis. If you believe you've located the source of the error, try calling repeatedly until you get a sympathetic voice on the other line, he says."I found one of those individuals with Capital One and I found one with Equifax," says Willis.

Explain your situation and understand that they are at the low end of the totem pole and may not be able to do much to help you, he adds. "The natural tendency is just to boil up, but it doesn't help anyone to do that. You just have to try to reason with them. Try to remain calm and reasoned and try not to appear like a nut."

Credit reporting agencies are required by the Fair Credit Reporting Act to thoroughly investigate any item on a credit report that the consumer says is wrong. However, in many cases, Francis says, the original furnisher of the information is the one who got the record wrong, not the credit bureau, and the credit reporting agencies don't follow up.  

"The credit reporting agencies don't conduct any type of independent investigation," says Francis. Instead, the credit bureaus send a consumer's dispute to the organization that supplied the information and rely on them to look into whether a consumer is really dead. "That's how things are getting verified," he says.

If a creditor looks at its records and sees that the consumer is listed in its files as deceased, it doesn't always dig further, says Francis. "They're not really that interested in conducting investigations, either," he says. "It's not really a profit center for them so they are doing the bare minimum." As a result, the creditor sometimes ends up repeating the same inaccurate information to the credit bureaus.

At that point, consumers have few options but to wait and try again.

Banks and other types of creditors are required by law to thoroughly investigate whether the information they have on file is correct, says Francis. "They have the same duty that the credit reporting agency has," he says. "Both the credit reporting agency and the furnisher must conduct a reasonable investigation." So consumers have the legal ammunition to fight back against credit reporting agencies' and furnishers' claims that they are dead.

However, they have little power to speed up the process and get their credit reports unlocked when they need them.

"It takes a really persistent effort" to get a dispute resolved, says Nina Heck, director of the Consumer Credit Counseling Service of Maryland and Delaware. "Sometimes [a dispute] has to be resubmitted and resubmitted."

Heck has worked with multiple clients in the past who have been mistakenly declared dead and she says it often occurs because a client's name was mixed up with someone else.

When that happens, proving you are who you say you are can be a challenge, she says. "First, you have to prove that you are you and then you have to be able to validate that this [other] person is deceased," says Heck.

Beware of the Death Master File
Consumers who have been accidentally killed off by the Social Security Administration, rather than a creditor, have it even worse. The Social Security Administration keeps a master list called the Death Master File that lists everyone in the United States who has died. Sometimes, a person will get mixed up with someone else or a typographical error will cause them to be listed as deceased.

Once a consumer is listed as dead in the Death Master File, numerous stakeholders are notified, including the credit bureaus and other government agencies. Soon after, consumers' credit reports are shut down, their benefits are cut off and they are barred from getting a new job because they don't have a living Social Security number.

Getting taken off the Death Master File, meanwhile, can sometimes take years, according to numerous press reports, financially devastating those involved.

"As many news reports have accounted, incorrect death reports have created severe personal and financial hardship for those who are erroneously listed as deceased," said U.S. Rep. Sam Johnson of Texas in February, announcing a congressional hearing on the Death Master File's accuracy. "Those affected have experienced termination of benefits, rejected credit, declined mortgages and other devastating consequences, while their personal and private information is publicly exposed."

See related: A guide to your rights under the Fair Credit Reporting Act, How to dispute credit report errors

Published: September 4, 2012



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