What really needs to happen is that quality control over credit report data needs to be enforced at the credit reporting agency level. In other words, before a CRA can legally accept an item for listing on your credit report, a CA or other creditor should have to furnish a complete record of the debt in question: the original instrument incurring the debt, and the full payment history. This data "packet" should have to be signed by a representative of the CA authorized to handle these matters (I also think bill collectors should have to be licensed--I wouldn't make the process extremely Byzantine or arduous, but I think 10 hours of training on procedures and consumer rights isn't too much to ask).
If an error then appears on a CRA, this means one of three things almost certainly happened:
1) A bogus creditor supplied false documents to the CA, which means the CA should be required to pick up the phone and call the district attorney's office, and fraud charges should be filed against the creditor (in other words, anyone knowingly supplying false information to a CA for the purposes of damaging a consumer's credit or getting payment from a consumer has committed a felony and should spend some time in the pokey).
2) The CA falsified the documents supplied to the CRA, in which case the CA should be required to take disciplinary action against the collector who signed off on the data, as well as pay a fine of $100 or 10% of the collection listed, whichever is greater. Such occurrences should be rare, and patterns with a particular CA should result in much larger fines and a revocation of the CAs license to collect debts.
3) The CRA agency placed an item on the consumer's report in error, in which case it should pay a $1000 fine.
In any event, a CRA should have five business days to correct a consumer's CR once the error has been pointed out.
If this was done, I guarantee you the error rate on CRs would plummet like a stone.
