The Fair Credit Reporting Act (FCRA), is an agency that promotes accuracy. Fairness, and privacy of information in the files of consumer reporting agencies. There are several types of consumer reporting agencies. Including credit bureaus and specialty agencies like agencies that sell information about check writing histories, medical records. And rental history records. It was passed in 1970 to address fairness, accuracy. As well as privacy of the personal information contained in the files of the credit reporting agencies.
How the Fair Credit Reporting Act (FCRA) Works
The Fair Credit Reporting Act agency is the primary federal law that governs. The collection and reporting of credit information about consumers. The agency rules cover how a consumer’s credit information is gotten. The duration for which it is kept, as well as how it is shared with others. Including consumers themselves.
The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) stand. As the two federal agencies which are charged with the responsibility of overseeing and enforcing the provisions of the act. Most states also have their own laws as it relates to credit reporting. The entire act can be found in the United States Code Title 15, Section 1681.
The three major credit reporting bureaus are Experian. Equifax, and TransUnion, and other more specialized companies. Gather and sell information on individual consumers’ financial history. Now, the information contained in their reports is also used to compute consumers’ credit scores. Which can affect say the interest rate they’ll have to pay to borrow money.
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The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection of consumers’ credit information and access to their credit reports.
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The Act (Title VI of the Consumer Credit Protection Act) protects information collected by consumer reporting agencies such as credit bureaus
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The Fair Credit Reporting Act protects your interests by governing how credit reporting agencies gather, protect and share your information.
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The Fair Credit Reporting Act protects consumers’ personal financial documents and prohibits unfair actions by big companies.
Determining the Data to Collect
The Fair Credit Reporting Act states the type of data. That the bureaus are allowed to collect. This includes the person’s bill payment history. Past loans, and current debts. It may also include employment information. Present and previous addresses if they have ever filed for bankruptcy or owe child support. And whether they have any arrest record.
FCRA also restricts who is allowed to view a credit report and under what circumstances. For instance, lenders may request a report when someone applies for a mortgage, car loan. Or another type of credit. Insurance companies, on the other hand, may also view consumers’ credit reports when they apply for a policy. The government on their end may request in response to a court. Order or federal grand jury subpoena, or if the person is applying for certain types of government-issued like licenses. In some cases, consumers must have initiated a transaction. Or agreed in writing before the credit bureau can release their report. For instance, employers can request a job applicant’s credit report. But only with the applicant’s permission.
Consumer Rights Under the Fair Credit Reporting Act (FCRA)
According to FCRA, consumers have the right to see their own credit reports. By law, they have access to one free credit report every 12. Months from each of the three major bureaus. This they can do by requesting their reports at the official. Government-authorized website for that purpose which is at Annualcreditreport.com. Under FCRA, consumers also have a right to the following:
- Firstly, to verify the accuracy of their report when it’s required for employment purposes.
- Secondly, to receive a notification if information in their file has been used against them in applying. For credit or other transactions.
- Thirdly, can dispute, and have the bureau correct information in their report that is incomplete or inaccurate. In a bid to repair their credit.
- Also, can remove outdated. Negative information (after seven years in most cases, 10 in the case of bankruptcy).
Where the credit bureau fails to respond to their request in a satisfactory manner, a. Consumer is allowed to file a complaint with the Federal Consumer Financial Protection Bureau.