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The Fair Credit Reporting Act How it Works For You

The Fair Credit Reporting Act

According to the United States Congress, the success of the banking system depends upon fair and accurate credit reporting.

And since the economy depends upon the success of the banking system, it is not difficult to see the importance of The Fair Credit Reporting Act (FCRA).

This American law was set up originally in 1970, but was amended in 1996, 1997, 1998, 2001 and 2003 to include some very important reforms and additions.

One such addition was the inclusion of the US Patriot Act in 2001 to protect citizens from the attempts of terrorists to infiltrate the US banking system and thereby benefit from American commerce for the purpose of furthering their terrorist activities.

In addition, the Fair and Accurate Credit Transactions Act added in 2003 allows for persons to receive a free copy of their credit report each year.

This benefit makes it easier for consumers to keep their credit reports accurate.

Determining Credit Worthiness

Without this law in affect, major aspects of a person’s quality of life would suffer.

For example, personal and private information like medical records, that have nothing to do with whether or not a person is a good prospect for receiving credit would be obtainable by virtually anyone.

This law is also in place to protect banks and other credit issuers from extending credit to individuals who practice fraud or identity theft.

When a person has been convicted of these felonies, their credit report or consumer report will reflect that fact with the terms “fraud alert” or identity theft”.

The FCRA also regulates information that is gathered by consumer reporting agencies. Before an offer of employment is given to an applicant, many companies will check with these consumer reporting agencies as to the background and general character or reputation of the applicant before hiring them.

Insurance companies usually will consult with a consumer reporting agency before issuing an insurance policy to a prospective applicant. Most insurance companies will not issue a policy to a person who is on active military duty and their consumer report would reflect the terms “active military alert” thereby protecting the insurance company from unnecessary risk.

The FCRA regulates the type of information that can be collected, the purpose for collecting it and who can collect it. It also requires that a person be notified in writing when information is being gathered and for what purpose.

In addition, the FCRA requires by law that a person must be notified in writing when an adverse decision is made based on certain information in a person’s credit report and what agency supplied this information.

When a person is late on payments that they are making towards credit they have already received, the FCRA states that they must be notified in writing when that information will be sent to a credit reporting agency.

Inaccurate Credit Reports

The FCRA further stipulates that when a person’s credit report is found to be inaccurate by that person, the credit reporting agency must comply with the requirement to investigate this complaint and correct it if necessary.

The burden of proof with regard to accuracy lays upon the credit reporting agency. They have a huge responsibility to report accurately. If they do not make needed corrections intentionally or negligently to a consumer’s credit report within a reasonable amount of time, they could be liable for damages.

And too, if the dispute exists concerning the accuracy of an item on a person’s credit report is between the bank or credit issuer and the individual, the credit issuer cannot report this item to a credit reporting agency without stating that the item is being disputed.

The FCRA also allows the protection of information with regard to child support obligations. For example, if an individual is behind on their child support payments, a notice of “overdue support” can be added to their credit report. However, any agency requesting this information must provide 10 days notice before requesting this information and they cannot use this information for any other purpose, whether civil or criminal.

When it comes to the FCRA regulations regarding personal information or offerings of credit, pretty much everything has to be disclosed in writing. Permission has to asked for and then given in writing for virtually everything that is connected with someone’s personal file.

Credit Card Issuers and Insurance Companies

Credit card issuers and insurance companies have been provided lists of people’s names and addresses from credit report agencies for the purpose of pre-screening their credit information.

They will then send offers by mail or email for the purpose of soliciting credit card applications or insurance policies offers. The FCRA gives you the right to opt out of these offers by notifying the consumer reporting agencies that you wish to have your name and address removed from any lists that they provide to these types of companies.

You must send a signed notice of election form that the particular agency provides you. They must send you this form no later than 5 days after you request it and they must inform you that this opting out is only good for 5 years.

Enforcement of the Fair Credit Reporting Act

Again, the FCRA is a law set up to protect the consumer. However, laws are useless without enforcement and that is why the Federal Trade Commission, an independent agency of the United States government, has the job of enforcing the Fair Credit Reporting Act.

If you have a complaint about how a credit or consumer reporting agency has handled your dispute concerning an item on your credit report, you can file a complaint at this website, https://www.ftccomplaintassistant.gov/ or you can call 1-877-382-4357. You should first attempt to make the correction by contacting the credit agency directly that is listing the error and request an investigation.

The three major credit reporting agencies or bureaus are Equifax, TransUnion and Experian. You can contact them by telephone or by mail.

Requesting a Free Yearly Credit Report

If you wish to request your free yearly credit report, you can do this by calling 1-877-322-8228 or you can download a request form from the website listed below, print it, fill it out and then mail it to:

Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. You should receive your free credit report within 15 days.

The easiest way to request your free annual credit report is by visiting the government-authorized website, annualcreditreport.com and simply following the prompts for requesting a report.

References:

FTC Website - The Fair Credit Reporting Act

FTC Website - Fair Credit Reporting Act Resources