By Charlestien Harris
The average consumer knows very little about this law enacted by congress in 1970. The Fair Credit Reporting Act (FCRA) was enacted to promote accuracy, fairness, and the privacy of personal information assembled by credit reporting agencies. This year the law will be celebrating its 50th anniversary and I thought this would be a great time to break down the specifics of how the law helps the consumer with addressing credit issues.
After 50 years of enforcement, the evidence suggests that the law has been very beneficial to consumers. FCRA regulates the practices of consumer reporting agencies that collect and compile information into reports used by a wide variety of businesses in making eligibility decisions affecting consumers.
What’s included in a consumer report you may ask? Lots of information, including consumers’ credit accounts, payment history, personal data, and information compiled from public records – for example, arrests, judgments, and bankruptcies.
The Fair Credit Reporting Act initially covered credit reporting agencies primarily, but over time it’s been amended to expand coverage for two other important categories of businesses in the credit reporting system:
1. Entities that use consumer reports (for example, employers, lenders, and landlords).
2. Entities that provide information to credit reporting agencies.
There are three aspects of the FCRA that are as applicable today as they were in 1970. First, the law is designed to promote the efficiency of the nation’s consumer credit systems. Before FCRA, people had to wait weeks before their applications for credit could be evaluated which created delays that could inconvenience and hurt consumers.
Second, the FCRA includes mandates to improve the accuracy and validity of the information included in consumer reports. And third, the law includes provisions to prevent the misuse of sensitive consumer information by limiting access to those who have a legitimate need for it.
Here is a summary of your rights under FCRA:
Under the FCRA, you have the right to dispute both the accuracy and the completeness of items in your file, not just inaccurate information.
The distinction between accuracy and completeness can be important. For example, your credit report might state accurately that a creditor sued you. But this information might be incomplete because you later paid the debt or are not actually liable for it. You can dispute the information about the lawsuit because it is incomplete. Inaccurate, incomplete, or unverifiable information usually must be removed or corrected within 30 or 45 days.
Consumer reporting agencies can’t report outdated 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.
You have the right to find out what’s in your file.
You have the right to get all the information about you contained in the files that a consumer reporting agency prepared—called a “file disclosure.” Sometimes the file disclosure is free, other times you might have to pay a fee.
You have the right to ask for a credit score.
You may ask for your credit score from consumer reporting agencies that create or distribute scores, but you’ll usually have to pay a fee for it. You can get one free credit report every 12 months upon request from each nationwide credit reporting agency.
If information in your credit file is used against you, the user must tell you.
If someone uses your credit report or another type of consumer report to take adverse action against you (deny your application for credit, insurance, or employment) they must let you know and give you the name, address, and telephone number of the agency that provided the information.
Employers must get your consent before getting your credit file.
A consumer reporting agency generally can’t give your file to your employer, or a potential employer, without your written consent.
You may seek damages from FCRA violators.
The FCRA lets you sue a credit reporting agency, person or entity for negligent or willful noncompliance with the law within two years after you discover the harmful behavior or within five years after the harmful behavior occurs, whichever is sooner.
Identity theft victims and active duty military personnel have certain rights.
For example, identity theft victims may ask businesses for a copy of transaction records (like credit applications) relating to the theft and military personnel may place an active duty alert on their credit reports.
Most states have passed consumer protection laws that are like FCRA, some of which provide even greater protection for consumers than federal law. For more information about the FCRA or your state’s laws, contact your state or local consumer protection agency, your state Attorney General, a local attorney, or a HUD approved counseling agency. Until next week, stay financially fit.