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Consumer Protection Under The Federal Credit Reporting Act
The FCRA or the Federal Credit Reporting Act is a federal law that regulates the compilation and distribution of consumer credit information. It promotes the truthfulness, fairness and discretion of the personal credit information that is collected by credit reporting agencies. It was originally enacted back in 1970 and the most recent amendment took place in December 2003.
Credit reports are highly utilized in the United States. In the beginning a credit report was utilized only to calculate the creditworthiness of a person for the purpose of obtaining credit. Now credit reports are utilized for other things like insurance underwriting and even employment applications. At the present time it is absolutely lawful for an individual to be turned down for insurance coverage or employment based upon the information contained in a credit report. An individual can even be terminated from a job based upon credit report information.
A credit-reporting agency is a business that collects, compiles and sells credit information on consumers. In the United States there are three key credit-reporting companies, TransUnion, Experian and Equifax.
The FCRA protects consumers from undeserved, incomplete and incorrect reporting on a credit report. Under this law a consumer has the right to dispute and challenge any information on a credit report that is inaccurate, incomplete or erroneous in any way. As a consumer you have the opportunity to present a dispute to the credit companies. After receipt of your dispute letter they will have 30 days in which to either bear out the accuracy of their reporting or to remove it from your credit report.
Under the FCRA, a consumer is in addition allowed to take delivery of one free credit report from each of the credit bureaus one time per year. In order to get your report you just need to submit a request. If you are denied credit because of something that is listed on your credit report you as well have a right at that time to receive a credit report. The credit bureau that is reporting the poor information must give a credit report to the consumer.
Oftentimes bad credit listings are deleted from credit reports after a dispute because the credit bureaus were unable to authenticate the accurateness within the time period. If information is removed the credit bureaus cannot reinstate the listing without notifying the consumer in writing.
The period of time that bad information can stay on a credit report is also regulated by the FCRA. In general a item can only remain on a credit report for 7 years following the delinquency. In the case of a bankruptcy the listing can remain for 10 years and in the case of a tax lien, the limit is 7 years after it is satisfied.
A consumer should take the time to issue a dispute if they have any dubious information on their account because it has been estimated that as many as 40% of all disputes end up getting the information removed from the credit report because it could not be verified within the time limit. If the information is negative but truthful and accurate it should not be disputed but should stay on the credit report for the specified time period.
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