How The Fair Credit Reporting Act Protects Consumers

The FCRA (Fair Credit Reporting Act) is a law that regulates all credit reporting agencies. It requires agencies to ensure all data gathered, recorded and distributed is accurate and a fair summary of an individual’s credit history. The main purpose of the federal law is to protect individuals from having misinformation used against them by credit providers and employers.

The FCRA provides you with lots of consumer rights. The act gives you the legal right to request a copy of your credit report free of charge once every 12 months. All credit reporting agencies have to deal with any requests within fifteen days. The act also limits who can access your credit report. Companies need to have a valid need in order to obtain your data. As a consumer, you have the right to be told which companies have requested access to your report.

You can dispute any inaccurate information on your report at any time and the reporting agency is legally obligated to investigate the disputed data. All inaccurate and outdated data has to be removed from your report. Negative entries, such as missed or late payments, remain on your file for seven years. If you file bankruptcy, however, it might remain on your credit report for a decade.

The three largest credit reporting agencies are TransUnion, Equifax and Experian. These agencies collect and sell huge amounts of information on consumers, so it’s important that said consumers are provided with some legal protection. The FCRA also applies to employers, banks, credit unions and any business that uses data from a credit report to deny consumers employment or financial products.

If a buyer of consumer report data or a consumer reporting agency violates the FCRA, you have a right to seek damages. You can sue the violating party in a state court or federal court. In addition, you have a right to know if your credit report has been used against you. For example, if you have been denied employment, insurance or credit by a company, you can ask the company to explain their specific reasons for the denial.

You can learn more about the history of the fair credit reporting act by visiting a good financial or legal authority website. The law was first passed in 1970, but it has been amended twice. You will often hear the FCRA talked about in the media as there are many not-for-profit advocacy groups in operation who make it their mission to protect consumers from bad practices of credit reporting agencies.