What Is the Fair Credit Reporting Act?

What Is the Fair Credit Reporting Act?

Your credit report paints a broad picture of your credit history. Lenders, landlords and even employers may rely on the information contained in credit reports when making decisions.

Unfortunately, these reports can sometimes contain inaccuracies. The good news is that you have rights under the Fair Credit Reporting Act (FCRA) — but what is FCRA and how does it protect consumers?

This blog post answers some of the most frequently asked questions about FCRA including “What does FCRA apply to?” and “What does the Fair Credit Reporting Act do?” We will also discuss how you can enforce your rights under this law.

What Is the Fair Credit Reporting Act?

Let’s start with a basic question: What is the FCRA Act? Congress passed the Fair Credit Reporting Act into law in 1970, as a means of protecting the consumer information collected by consumer reporting bureaus. Financial institutions, health care providers and other entities that provide information to credit reporting agencies must adhere to the provisions of the FCRA.

What Is the Purpose of the Fair Credit Reporting Act?

The FCRA addresses the way consumers’ personal information is collected by credit bureaus, how it is used and how it is shared. The primary provisions of the Act are designed to do the following:

  • Govern the ways credit reporting agencies gather information about consumers
  • Regulate how businesses and others can check credit reports
  • Give consumers rights when adverse decisions are made based on their credit files
  • Provide mechanisms for consumers to review their credit reports and dispute inaccuracies

What Does the Fair Credit Reporting Act Protect Consumers From?

The information contained in your credit report can influence your ability to obtain loans or financing and the terms of those agreements. Credit reports and ratings are also used by landlords when they determine whether to rent to applicants, and even by employers in some cases when deciding whether to extend job offers.

The FCRA protects consumers from potential misuse of credit information by placing limits on who may request consumers’ credit reports and under what circumstances. The law also protects consumers from the potential negative consequences of credit reporting inaccuracies by giving people ways to monitor their reports and dispute information contained in the reports. The FCRA’s provision allowing consumers to freeze their credit files can also mitigate identity theft.

What Are Your Rights Under the Fair Credit Reporting Act?

The FCRA gives consumers several important and enforceable rights:

  • Monitor your credit: You have the right to request and review your credit report at any time. What’s more, you can review your report from each of the three major credit bureaus at no cost once every 12 months.
  • Review/verify report in employment situations: A potential employer may not pull your credit file without your written consent, and you have the right to receive a copy of the information provided to the employer.
  • Notification of adverse actions: If a creditor or lender denies your application for a loan, credit card, mortgage or other financing based on information in your credit report, they must notify you of the reason and provide the name and contact information for the report on which they based their decision.
  • Dispute inaccuracies: You have the right to dispute information you believe is inaccurate in your credit report. If you file a dispute, the credit bureau must investigate it within a specified period and notify you of the outcome.
  • Remove outdated/negative information: Credit reporting agencies are required to remove outdated and negative information after a specified time.
  • Freeze your credit file: You have the right to place a “freeze” on your credit report and to add “fraud alerts” to your file. These steps make it more difficult for lenders/creditors to pull your credit file and can benefit consumers who have concerns about potential identity theft.

How to Enforce Your FCRA Rights

The implications of credit reporting errors can be significant and long-lasting, so it is important to stay on top of your credit file and address inaccuracies. The experienced attorneys at Stein Saks, PLLC help consumers restore their credit profiles and enforce their rights under the FCRA.

To learn more, and to schedule a consultation with a consumer protection attorney, contact Stein Saks, PLLC today.

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