What is the Fair Credit Reporting Act?

Definition of the Fair Credit Reporting Act (FCRA)

FCRA Rules for Credit Reporting Agencies

Requirements for Information Providers

Requirements for Companies that Use Your Credit Report Information

Dealing with FCRA Violations

What is the Fair Credit Reporting Act?

The Fair Credit Reporting Act (FCRA) is a federal law that governs how consumer credit information is collected and used. Under the FCRA, consumers have the right to view the information in their credit file and dispute inaccurate information.

FCRA Rules for Credit Reporting Agencies

According to the FCRA, credit reporting agencies are companies that collect information about consumers’ credit for the purpose of selling it to third parties. Examples of the three major credit reporting agencies are the big three credit bureaus: Equifax, Experian, and TransUnion.

Note: The three major credit bureaus are not the only ones in the United States. The Consumer Financial Protection Bureau publishes a list of nearly 50 different companies that consider themselves consumer reporting agencies. The FCRA rules apply to those agencies as well.

Under the FCRA, credit agencies and other credit reporting agencies must adhere to strict procedures.

Providing You with a Copy of Your Credit File Upon Request

You must provide information that identifies you personally so that the credit agency can confirm that you are the person requesting your credit report. There are certain times when credit agencies must provide you with a free copy of your credit report:

• Once a year, through the centralized website annualcreditreport.com.
• If a company takes an adverse action (denies your application or imposes a higher interest rate) based on the information in your credit report.
• If you are unemployed and plan to look for work within the next 60 days.
• If you are on public assistance.
• If you are a victim of identity theft.
• If your credit report contains inaccurate information due to identity theft.

Note: In response to the COVID-19 pandemic, the three major credit reporting agencies are offering free weekly online reports until April 2022.

Investigating Information You Dispute

The only times the agency may not investigate are if you do not provide enough information for them to investigate your dispute, if you disputed everything in your credit report, or if you have re-disputed an item without providing additional information regarding your dispute.

Correcting or Deleting Information

Agencies must correct or delete inaccurate information within 30 days of your dispute, or up to 45 days if you submitted additional information after filing your written dispute.

Additionally, they must delete old (negative) information that is seven to ten years old, depending on the type of information.

Restricting or Granting Access to Your Information

Agencies must restrict access to your file to companies with a legal purpose for viewing your credit report.

Note: The FCRA stipulates when companies can access your credit report. Common situations that fall under “permissible purpose” include: determining whether to grant you credit, in connection with debt collection, for employment purposes, and for the underwriting of insurance policies.

They must also provide your credit report to employers only with your written consent, and provide you with a copy of your credit score upon your request.

Agencies must also allow you the opportunity to opt-out of pre-screened credit offers.

Requirements for Information Providers

The FCRA applies to more than just credit bureaus. Entities that provide information to the credit bureaus, or information providers, also have legal obligations:

• They cannot report inaccurate information.
• They must
• They must quickly update and correct any inaccurate information previously provided to credit bureaus.
• They should inform you of any negative information reported to the credit bureaus within 30 days.
• They must notify credit bureaus when you voluntarily close an account.
• They should have a procedure to respond to identity theft notices sent by credit bureaus.
• They cannot report accounts that have already been identified as a result of identity theft.

You have the right to dispute inaccurate information in your credit report directly with the information provider in writing. After receiving your dispute, the creditor must notify the credit bureau of your dispute, and they are not allowed to continue reporting inaccurate information until your dispute is investigated.

Requirements for companies that use your credit report information

Companies may request your credit report if they have a “legal purpose”; for example, to grant you credit after you have applied. The FCRA requires these companies to:

• Notify you when you are denied because of information in your credit report.
• Provide you with the name and address of the credit bureau that provided the report used in the decision to deny you.

Dealing with FCRA violations

You can seek damages from a company that violates your rights under the FCRA, whether it is the credit bureau, information provider, or your credit report user.

Source: https://www.thebalancemoney.com/what-you-should-know-about-the-fcra-960639