What is the Fair Credit Reporting Act?
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General Purpose: The Fair Credit Reporting Act (FCRA) is a law that regulates consumer reporting agencies and those using consumer reports. The goal is to ensure accurate reporting while striving to keep consumer’s credit information private.
Whatever your situation when it comes to debt, it is important to understand your privacy rights. The requirement to keep credit information private is not just for original creditors and debt collectors. Consumer reporting agencies and others also have an obligation to protect your credit information.
The primary law for protecting consumer credit information is the Fair Credit Reporting Act (FCRA). This law protects the information received by credit bureaus and other consumer reporting agencies. You could consider this a separate layer of protection for your privacy in addition to the Fair Debt Collection Practices Act (FDCPA).
In this article, you will learn how the FCRA protects you and your credit information. In addition, you will learn the specific requirements for consumer reporting agencies and your rights. Finally, if there is a violation of the FCRA, you will learn what action you can take.
How Does the FCRA Work?
It is the goal of the FCRA to ensure that consumer reporting agencies provide accurate and fair credit information. In addition, consumer reporting agencies must ensure adequate privacy of these records.
What is a consumer reporting agency? Most notable are credit bureaus. A credit bureau has the task of gathering information from creditors. They do this to provide a detailed history of a consumer’s borrowing and payment of debts.
Does the FCRA apply only to consumer reporting agencies? No. Under the FCRA the right to privacy also extends to anyone accessing these consumer reports. For example, a landlord may obtain a credit report to confirm what you reported in your tenant application. These and similar types of individuals must comply with the FCRA.
Specific Rights Under the FCRA
You have several different rights under the FCRA. Here are some of your primary rights:
- Knowledge of What is in Your File. You have the right to all credit history information that a consumer reporting agency has in their possession. An amendment to the law allows you to request a free credit report each year from the three nationwide credit bureaus.
- Adverse Action. If a company uses your credit report to take adverse action against you (e.g., deny a loan) they must tell you.
- Right to Dispute. You have a right to dispute any information in your credit report that you believe is either inaccurate or incomplete. A consumer reporting agency must remove inaccurate or incomplete information within 30 days.
- Credit Score. You have a right to know your credit score at any time. Note: There may be a fee to request this score.
- Time Limits on Negative Information. Negative credit information can only stay on your report for so long. Typically, a credit report should not contain negative information older than 7 years. The one exception is bankruptcies which can stay on your credit report for up to 10 years.
- Valid Need. An entity must have a valid need to receive your credit information. Some examples include a creditor, landlord or prospective employer. In many cases, such as an employer, they must also have your written consent.
Under the FCRA you also have the right to limit prescreened offers you receive based on your credit report.
What Can I Do if There is a Violation of the FCRA?
If a consumer reporting agency or other entity violates the FCRA, you can sue them in state or federal court. You may receive actual and punitive damages if you can prove a willful violation. In addition, if you are successful, the violator must pay your attorney’s fees.
In addition, if there is false reporting by a debt collector, you have additional protections under the FDCPA.
In some instances, you may want to prevent future unauthorized uses of your credit report. In this situation, you can request the following:
- Security Freeze. This places a freeze on your credit report. When this happens, credit or loans require your express consent for approval.
- Fraud Alert. When you add a fraud alert to your credit file, a company must take certain steps to confirm your identity. Only after they confirm your identity can they approve a loan or extend your credit.
Conclusion
The FCRA is a great tool to ensure that your consumer credit report contains accurate and recent information. It also helps to ensure that your credit information is not shared with people who do not need it.
However, like all laws, you may find yourself in a situation where someone violated your rights under the FCRA. If this happens, consider discussing the situation with a consumer rights attorney. They can ensure your credit report is accurate and seek damages for any FCRA or FDCPA violations.
Additional Resources