The Fair Credit Reporting Act (FCRA) is a complex piece of legislation designed to promote the accuracy, fairness, and privacy of consumer information contained within the files of credit reporting agencies. You can see the FCRA in totality on the Federal Trade Commission’s website, however, there are a lot of terms, definitions, and rules that can confuse those of us who are not experts in the field.
So let’s make the Fair Credit Reporting Act a little bit easier to understand…
The Act was developed to protect consumers from the inclusion of inaccurate information in their credit reports. To help reach that objective, the FCRA regulates the collection, dissemination, and use of consumer information, including consumer credit information. As you most likely know, the three major credit reporting agencies collect, distribute and use consumer credit information. Therefore, the FCRA incorporates specific requirements for those agencies to help ensure the goal of consumer protection is maximally achieved.
FCRA and your rights
There are too many Fair Credit Report Act rights to list in this one article, but there are a number of important items that are good for every consumer to know.
A credit reporting agency must:
- Provide you with the information in your credit file upon your request
- Never provide your credit report to any party that lacks a “permissible purpose” (e.g. evaluation of a loan or credit application)
- Get your consent before providing your information to an employer
- Investigate information you dispute
- Correct or delete inaccurate information
- Delete outdated information – negative information more than 7 years old
How else does the FCRA help you?
In addition to the rights listed above, the FCRA maintains that all consumers are entitled to one free disclosure (credit report) every 12 months upon request from each of the three major credit reporting bureaus (Experian, Equifax and TransUnion).
Some of the other protections included in the FCRA include the right to:
- Receive Negative Information Notification if a financial institution submits, or plans to submit, negative information to a credit reporting agency.
- Seek Damages within a state or federal court from anyone, such as a consumer reporting agency or a user of consumer reports, who violates your rights under the Fair Credit Reporting Act.
- Get Detailed Denial Information if your credit report is used against you and caused a credit, insurance or employment rejection.
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