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The Fair Credit Reporting Act
(FCRA) The Fair Credit Reporting Act (FCRA) is an American
federal law that regulates the collection, dissemination, and use of
consumer credit information. It, along with the Fair Debt Collection
Practices Act (FDCPA), forms the base of consumer credit rights in
the United States.
agencies (CRAs) are entities that
collect and disseminate information about consumers to be
used for credit evaluation and certain other purposes. They
hold the databases which are the origins of a consumer's
credit report. CRAs have a number of responsibilities under
FCRA, including the following:
- Provide a consumer with information about him or her
in the agency's files and to take steps to verify the
accuracy of information disputed by a consumer. Under
the FACTA laws passed in 2003, consumers are now able to
receive one free credit report a year. Free reports are
obtainable at annualcreditreport.com
- Conduct reasonable investigations into consumer
disputes about incorrect information on their credit
- If negative information is removed as a result of a
consumer's dispute, it may not be reinserted without
notifying the consumer within 5 days, in writing.
- CRAs may not retain negative information for an
excessive period of time. The FCRA spells out how long
negative information, such as late payments,
bankruptcies, tax liens or judgments may stay on a
consumer's credit report - typically 7 years from the
date of the delinquency. The exceptions: bankruptcies
(10 years) and tax liens (7 years from the time they are
The 3 big CRAs Experian, Trans Union and
Equifax, do not
interact with information furnishers directly as a result of
consumer disputes. They use a system called E-Oscar.
An information furnisher, as defined by the FCRA, is a
company that provides information to consumer reporting
agencies. Typically, these are creditors, with which a
consumer has some sort of credit agreement. (credit card
companies, auto finance companies and mortgage banking
institutions, to name a few). However, other examples of
information furnishers are collection agencies (third-party
collectors), state or municipal courts reporting a judgment of some kind, past and present employers and bonders.
Under the FCRA, these information furnishers may only
report to a consumer's credit report under the following
- They must provide complete and accurate information to
the credit rating agencies.
- The duty to disputed information from consumers
falls on them.
- They must inform consumers about negative information
which has been or is about to be placed on a consumer's
credit report within 30 days.
(This notice doesn't have to be sent as a separate
notice, but may be placed on a consumer's monthly statement.
If sent as part as the monthly statement, it needs to be
conspicuous, but need not be in bold type. Required wording
(developed by the US Federal Treasury Department):
Notice before negative information is reported: We
may report information about your account to credit bureaus.
Late payments, missed payments, or other defaults on your
account may be reflected in your credit report.
'Notice after negative information is reported:
We have told a credit bureau about a late payment, missed
payment or other default on your account. This information
may be reflected in your credit report.
Users of the information for credit, insurance, or
employment purposes have the following responsibilities
under the FCRA:
- They must notify the consumer when an adverse action
is taken on the basis of such reports.
- Users must identify the company that provided the
report, so that the accuracy and completeness of the
report may be verified or contested by the consumer.
Likelihood of errors on a credit report
You should request copies of your Credit Report every
year to be sure there are no errors. Many consumers
frequently invoke their rights under the FCRA to review and
correct their credit reports.
The Fair and Accurate Credit Transactions Act ("FACTA")
of 2003 has allowed easier access to consumers wishing to
view their reports and dispute items.
|The federal Fair Credit Reporting Act (FCRA) promotes the
accuracy, fairness, and privacy of information in the files of
consumer reporting agencies. There are many types of consumer
reporting agencies, including credit bureaus and specialty
agencies (such as agencies that sell information about check
writing histories, medical records, and rental history
records). Here is a summary of your major rights under the
FCRA. For more information, including information
about additional rights, go to
or write to: Consumer Response Center, Room 130-A, Federal
Trade Commission, 600 Pennsylvania Ave. N.W., Washington, D.C.
- You must be told if information in your file has
been used against you. Anyone who uses a credit
report or another type of consumer report to deny your
application for credit, insurance, or employment - or to
take another adverse action against you - must tell you,
and must give you the name, address, and phone number of
the agency that provided the information.
- You have the right to know what is in your file.
You may request and obtain all the information about you
in the files of a consumer reporting agency (your
"file disclosure"). You will be required to
provide proper identification, which may include your
Social Security number. In many cases, the disclosure will
be free. You are entitled to a free file disclosure if:
- a person has taken adverse action against you
because of information in your credit report;
- you are the victim of identify theft and place a
fraud alert in your file;
- your file contains inaccurate information as a
result of fraud;
- you are on public assistance;
- you are unemployed but expect to apply for
employment within 60 days. In addition, by September
2005 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.
- You have the right to ask for a credit score.
Credit scores are numerical summaries of your
credit-worthiness based on information from credit
bureaus. You may request a credit score from consumer
reporting agencies that create scores or distribute scores
used in residential real property loans, but you will have
to pay for it. In some mortgage transactions, you will
receive credit score information for free from the
- You have the right to dispute incomplete or
inaccurate information. If you identify
information in your file that is incomplete or inaccurate,
and report it to the consumer reporting agency, the agency
must investigate unless your dispute is frivolous.
- Consumer reporting agencies must correct or
delete inaccurate, incomplete, or unverifiable
information. Inaccurate, incomplete or
unverifiable information must be removed or corrected,
usually within 30 days. However, a consumer reporting
agency may continue to report information it has verified
- Consumer reporting agencies may not 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.
- Access to your file is limited. A
consumer reporting agency may provide information about
you only to people with a valid need -- usually to
consider an application with a creditor, insurer,
employer, landlord, or other business. The FCRA specifies
those with a valid need for access.
- You must give your consent for reports to be
provided to employers. A consumer reporting
agency may not give out information about you to your
employer, or a potential employer, without your written
consent given to the employer. Written consent generally
is not required in the trucking industry.
- You may limit "prescreened" offers of
credit and insurance you get based on information in your
credit report. Unsolicited
"prescreened" offers for credit and insurance
must include a toll-free phone number you can call if you
choose to remove your name and address from the lists
these offers are based on. You may opt-out with the
nationwide credit bureaus at 1-888-5-OPTOUT
- You may seek damages from violators. If
a consumer reporting agency, or, in some cases, a user of
consumer reports or a furnisher of information to a
consumer reporting agency violates the FCRA, you may be
able to sue in state or federal court. Under section 15
U.S.C. § 1681s of the FCRA, a wronged party may collect
$1000 for each willful or negligent act which results in
the violation of the FCRA. It appears to the
consumer, that these penalties are minimal given the
damage to a consumer,
- Identity theft victims and active duty military
personnel have additional rights.
States may enforce the FCRA, and many states have
their own consumer reporting laws. In some cases, you may have
more rights under state law. For more information, contact
your state or local consumer protection agency or your state