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Consumer Protections Under The Federal Credit Reporting Act
The FCRA or the Federal Credit Reporting Act is a federal law that governs the compilation and dissemination of consumer credit information. It promotes the correctness, fairness and privacy of the personal credit information that is compiled by credit reporting agencies. It was originally enacted back in 1970 and the most recent amendment took place in December 2003.
Credit reporting is big commerce in the United States. Credit reports are used for their original and fair reason of evaluating the creditworthiness of an individual to borrow money and now they are also being used for such things as insurance underwriting and employment. As of right now it is entirely legal to be turned down for employment or insurance on the basis of your credit report.
Credit reporting agencies accumulate, compile and vend credit information on consumers. There are three major credit-reporting agencies in the United States. They are Experian, Equifax and TransUnion.
The Fair Credit Reporting Act protects consumers in a number of ways. For one it gives consumers the right to dispute and challenge information found on a credit report based upon completeness and truthfulness. If there is erroneous information displaying on your credit report you need to issue a dispute to the credit bureaus. They will have 30 days after delivery of your dispute letter in which to either corroborate the truth of their reporting or to remove the erroneous information from your report.
The FCRA also gives consumers the right to receive one free credit report from every credit-reporting bureau one time per year. The consumer just needs to put in a request. You also have the right to receive a report if credit is denied because of what is contained on the credit report. The credit bureau that is reporting the problematic information must offer the consumer a report so that the consumer knows exactly why they were denied credit.
Often negative information is removed from credit reports based upon disputes. If the information is deleted from a credit report because of a dispute the credit bureaus cannot put back the information unless they give notice to the consumer in writing.
The Federal Credit Reporting Act in addition clearly outlines the period of time that bad information can be retained on a credit report. Most often all listings can only remain on the credit report for 7 years from the point of delinquency. A bankruptcy can remain on the report for 10 years and a tax lien can remain for 7 years once it is paid off.
A consumer should take the time to provide a dispute if they have any problematic information on their account because it has been predicted that as many as 40% of all disputes end up getting the information deleted from the credit report because it could not be substantiated within the time limit. If the information is negative but truthful and accurate it should not be disputed but should remain on the credit report for the specified time period.
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