The Fair Credit Reporting Act (FCRA) is the federal law that defines how Credit Reporting Agencies (CRAs), data furnishers (Creditors and Lenders), employers, and other entities, who have a ‘permissible purpose’, can use, collect, access, and share your data.
The FCRA further enforces the laws that require such entities to protect your privacy, conduct their reporting with fairness, and ensure the accuracy of your credit information.
Failure to comply with FCRA Rules and Regulations may result in serious consequences, such as lawsuits, statutory damages, civil penalties, and fines, depending on the nature and the intent of the violation.
Below are a few Key Points of how the FCRA protects you as a consumer:
Accuracy: As a consumer you have the right to dispute any inaccuracies that you discover on your credit report and CRAs are required to investigate any inaccuracies and report back to you with corrections or verifiable proof of the reported item.
THE EXCEPTION TO THIS RULE IS THAT IF THE Credit Reporting Agency DETERMINES YOUR DISPUTE TO BE ‘FRIVILOUS’
Privacy: The FCRA restricts access to your credit report to only those entities with a ‘permissible purpose’, meaning that there must be a legitimate reason for a CRA to provide your credit report, such as an application for credit, application for employment, application for housing, underwriting insurance, or some other specific purpose outlined in the FCRA law, of course, with your consent.
CRAs are required, under FCRA Law, to delete unverifiable, inaccurate, or incomplete information from your credit report within 30 to 45 days of confirmation of a particular entry being deemed as such.
CRAs are required to delete negative information such as late payments, defaults, or collection accounts after 7 years from the date of original delinquency, and bankruptcies can remain on your credit report for 10 years.
CRAs must obtain your consent prior to providing your credit report to your employer or to your future employer. Your employer must provide you with a ‘stand-alone’ document that discloses and informs you that your employer will request your credit report for employment purposes or as part of a background check. This consent must be separate from any other document and must be a ‘stand-alone’ document.
You are Entitled to Request Your Credit Report and Your Credit Score from the Credit Reporting Agency, however, in some instances you would have to pay to receive your credit score, though some banks, credit unions, and other entities may make your credit score available to you for free.
Creditors, Lenders, Employers, or any entity with a ‘permissible purpose’ is required to inform you, if in fact, your credit report was part of the decision-making-process in rejecting or denying your application for credit, application for housing, or application for employment, and must also inform you of which Credit Reporting Agency was used to access your credit report.
The FCRA grants you the right to know what is in your credit file for free under certain circumstances, such as:
- when you are unemployed but are expected to apply for employment within 60 days
- are a victim of identity theft
- are on public assistance
Also, you are entitled to a free credit report from all three Credit Reporting Agencies through AnnualCreditReport.com.
OPT OUT of Credit Offers: You have the right to OPT OUT and restrict ‘pre-approved’ credit card and insurance company offers that you receive in the mail based on your credit report by calling 1-888-5-OPOUT or 1-888-567-8688
Credit Freezes: You have the right to place a ‘security freeze’ on your credit profile, which will block any creditor or entity from accessing your credit report, and will further prevent any application for credit from being processed without your knowledge or your consent.
The FCRA grants you the right to bring suit, in federal or state court, when and if any entity, including any Credit Reporting Agency, violates your rights under the FCRA.
Identity Theft Victims and Active Duty Military Members have additional rights and certain provisions that cover these special circumstances, and under certain situations may require the need to consult an attorney who is well versed in credit law to protect your consumer rights.
