Have you ever checked your credit report to see if it’s accurate? Or removed out-of-date information? You’re able to do those things because of the Fair Credit Reporting Act (FCRA).
The FCRA has been around since 1970. For decades, it’s helped consumers gain access to their credit scores, histories, and reports. Without it, creditors, businesses, and banks could see your financial information but you couldn’t.
Read on for more information about what the Fair Credit Reporting Act is and how you can benefit from it.
What is the Fair Credit Reporting Act?
According to the Federal Trade Commission, the FCRA “promotes the accuracy, fairness, and privacy” of your credit information. If your information isn’t accurate, the FCRA gives you the right to make it so.
Robert L. Foehl, executive-in-residence for business law and ethics at Ohio University, said that before the law existed, there was no way to make sure consumer reporting agencies were acting in your best interest.
“Before the federal FCRA was enacted, there was no law that ensured that the nation’s consumer reporting agencies were acting with fairness, impartiality, and with respect to a consumer’s right to privacy,” Foehl said. “Many times, consumer reporting agencies maintained inaccurate information on consumers.”
Now, however, you have the right to access your credit information and can fight against inaccuracies in your report.
Learn your rights under the FCRA
The FCRA protects consumers and their credit information. Under the FCRA, you have the right to:
- Be told if your credit information has been used against you. If someone uses your credit report to deny your application for employment, insurance, or credit, they must tell you. They also must provide you with the contact information of the agency that gave them the information.
- Know what’s in your file. This could be important if your identity is stolen, if you’re denied a job or line of credit, if your report includes inaccurate information because of fraud, or other reasons.
- Get a free credit report. You can get a free copy of your credit report from each of the three major credit reporting agencies once a year through AnnualCreditReport.com. You can request all three at once or one at a time. The Consumer Financial Protect Bureau recommends the latter.
- Dispute information on your credit report. Don’t let false information stick around. You have the right to dispute errors on your credit report, and consumer reporting agencies are required to remove or correct inaccurate, incomplete, or unverifiable information.
- Limit access to your file. A consumer reporting agency can provide your credit information only to people with “a valid need,” as defined by the FCRA. Additionally, you must provide written consent for your information to be given to your employer or a potential employer.
- Fight wrongdoers. If a consumer reporting agency violates the FCRA, you might be able sue in state or federal court. If you’ve been denied credit because you receive public assistance or because of your race, color, national origin, religion, sex, marital status, or age, you have even more rights under the Equal Credit Opportunity Act.
How does the Fair Credit Reporting Act help you?
The FCRA prevents credit reporting agencies from collecting and selling your information. It also ensures your credit report contains accurate and up-to-date information. If it doesn’t, you have the opportunity to fix it.
Leslie H. Tayne of Tayne Law Group said that without the FCRA, wrong information could remain on your credit report, hurting you and your credit in the long term.
“It keeps creditors in check so that they can’t haphazardly report items on your credit report,” Tayne said. “The FCRA puts restrictions on who can access your personal credit information and how that information can be used.”
The FCRA also helps you fix mistakes credit bureaus and reporting agencies make.
“Sometimes [a request] to investigate an error can fall through the cracks, or maybe it wasn’t examined thoroughly enough,” Tayne said. “If a credit bureau shot down your dispute, the FCRA gives [you] a right to add a 100-word statement to your report explaining your current situation.”
Know what’s in your credit report
If you’re unsure about what’s in your credit report, review your options. You have the right to know what is in your file. Take the time to review it, dispute any errors, and ensure it’s in the best possible shape.
Wrong information can be a detriment to your credit. A low score might mean getting denied student loans, personal loans, credit cards, or a mortgage. Fixing up your report will give you an advantage if you need credit in the future.
Stay on top of your credit as much as you can. As the CFPB suggests, request a report every four months so you can track your credit throughout the year. Don’t ignore your credit.
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