What is the Fair Credit Reporting Act (FCRA)?

The Fair Credit Reporting Act (FCRA) is a federal law that regulates the collection of consumer credit information and access to their credit reports.

It was passed in 1970 to address the fairness, accuracy, and privacy of personal information on file with credit reporting agencies.

How the Fair Credit Reporting Act (FCRA) works

The Fair Credit Reporting Act is the primary federal law that governs the collection and reporting of credit information about consumers. Its rules cover how a consumer’s credit information is obtained, how long it is kept, and how it is shared with others, including consumers themselves.

Key information:

  • The law Fair Credit Reporting Act (FCRA) governs how credit bureaus can collect and share information about individual consumers.
  • Businesses check credit reports for many purposes, such as deciding whether to make a loan or sell insurance to a consumer.
  • The FCRA also gives consumers certain rights, including free access to your own credit reports.

The Federal Trade Commission (FTC or Federal Trade Commission) and the Consumer Financial Protection Bureau (CFPB o Consumer Financial Protection Bureau) are the two federal agencies charged with overseeing and enforce the provisions of the law. Many states also have their own laws related to credit reporting. The law in its entirety can be found in the United States Code, title 15, section 1681.

The three major credit bureaus (Equifax, Experian, and TransUnion), as well as other more specialized companies, collect and sell information about the financial history of individual consumers. The data included in your reports is also used to calculate the consumer credit scores, which can affect, for example, the interest rate you will have to pay to obtain a loan.

The Fair Credit Reporting Act outlines the type of data bureaus are authorized to collect. That includes bill payment history, previous loans and current debts. It may also include employment information, current and former addresses, whether you have filed for bankruptcy, whether you owe child support, and any arrest records.

Access to information

The Fair Credit Reporting Act (FCRA) also regulates who can see a credit report and under what circumstances. For example, lenders may request a report when someone applies for a mortgage, car loan, or other type of credit.

insurance companies they can also view consumers’ credit reports when they apply for a policy. The government may apply in response to a court order or federal grand jury subpoena, or if the person is applying for certain types of government-issued licenses. In some cases, but not all, consumers must have started a credit process or have previously authorized the credit bureau in writing before it can issue their report. For example, employers can request a job applicant’s credit report, but only with the permission of the applicant.

The Fair Credit Reporting Act (FCRA) restricts who can see a consumer’s credit file and for what purposes.

Consumer rights under the Fair Credit Reporting Act (FCRA)

Consumers also have the right to view their own credit reports. By law, they are entitled to one free credit report every 12 months from each of the three major bureaus.

You can request your reports on the official website authorized by the government for that purpose, AnnualCreditReport.com. Under the FCRA, consumers also have the right to:

  • Verify the accuracy of your report when required for employment purposes.
  • Receive a notification if the information in your file has been used against you to apply for credits or other transactions.
  • Dispute – and have the office correct – information on your report that is incomplete or inaccurate.
  • Eliminate outdated and negative information (after seven years in most cases, 10 in bankruptcy).

Note that if the credit bureau does not respond to your request satisfactorily, you can file a complaint with the credit bureau. Federal Office of Consumer Financial Protection.

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