The Fair Credit Reporting Act establishes certain rules for the credit reporting agencies and outlines your rights against them if they fail. You’ve heard about having rights to a fair credit report. Here, in plain English, is a list and explanation of your most important rights under the Fair Credit Reporting Act.
The Importance of Credit Reports
Our country runs on credit and credit information and the credit reporting behind them. Obviously, people use credit to purchase things, but as more and more people are finding out, credit reports are used for much more than that. They often impact employment decisions, housing decisions and rates. They also affect business equipment lease rates and insurance availability and price, among other things.
Bad credit has a high price in so many ways.
Credit Reporting Network
As important as all the interests affected by it are, the credit reporting network (the businesses which create and publish your credit information) is a vast and largely faceless bureaucracy. Congress intended the federal Fair Credit Reporting Act (FCRA) to create some accountability in this network. The FCRA was designed to safeguard the accuracy, fairness and privacy of information in the files of consumers held by the reporting agencies.
Different Kinds of Credit Reporting Agencies
There are many different kinds of consumer reporting agencies. Almost everybody knows about the credit bureaus, of course, and there are also “specialty agencies” that sell information about check writing histories, medical records and rental history. The FCRA was directed primarily at these agencies, rather than the creditors or companies with which you normally do business.
Here is a partial list of your major rights under the FCRA.
This isn’t a complete, exact replication of your rights under the Fair Credit Reporting Act. As with most important laws, the exact rights and their limits change as courts interpret the laws. But this will give you an accurate overview – a place to start.
Access to Your Credit Report Limited
A consumer reporting agency may provide information about you only to people with a valid need. These include considering an application with a creditor, insurer, employer, landlord, or other business. The FCRA specifies those with a valid need for the information. And in most cases you must give your consent before they get the information.
Rights When Credit Information Used Against You
Anyone who uses a credit report or another type of consumer report to deny an application for credit, insurance, or employment – or to take other adverse actions against you – must tell you. They also must give you the name, address and phone number of the agency that provided the information. You have a right to a free copy of that report.
Right to Find out What Is in Your File.
You can find out all the information about you in the files of a consumer reporting agency. You must be offered a free disclosure if:
- A person has taken adverse action against you because of information in your credit report;
- You place a fraud alert in your file as a victim of identity theft;
- Your file contains inaccurate information as a result of fraud;
- certain other reasons.
All consumers will be entitled to one free disclosure every 12 months upon request from each nationwide credit bureau and from nationwide specialty consumer reporting agencies.
Right to Dispute and Correct Information
If you identify information in your file that is incomplete or inaccurate and report it to the consumer reporting agency, you have rights. The agency must conduct a “reasonable” investigation, and it must report the information as disputed. If it is unable to verify the information after investigation, the agency must remove or correct the entry.
For practical reasons, this provision may actually provide more important rights against the businesses that report credit events than against the reporting bureaus. Debt collection firms have a hard time providing the required verification.
Time Limits for negative information.
In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.
Note that is in “most cases.” There are important exceptions to this rule. The exceptions relate to larger transactions. Where a person is seeking a job with a higher salary or insurance with a higher payment amount, the time limit may not apply.
Next Step to Take
Sign up for your free copy of the Fair Credit Reporting Act on this page.