Federal Credit Reporting Act – The Consumers’ Rights

The Federal Credit Reporting Act, or otherwise known as FCRA, is a USA federal law regulating the institutions that collect credit information from consumers. This regulation acts as a measure of safety and fairness towards the accuracy and privacy related to the personal credit information that credit report agencies obtain from consumers. This law came into being in 1970 having its latest amendment in December 2003.

When credit reports were first registered, their purpose was commonly and frequently served for showing how reliable an individual might be when applying for a new credit line or a loan.

In time, these credit reports started to be used also for closing insurance deals and getting a job that has to do more or less with finances. Thus an individual can nowadays face a decline when applying for such a job or be denied a certain form of insurance if his credit report presents negative points.

A credit reporting company is a business that deals with collecting, organizing and selling credit information to consumers. Three main agencies are there in USA that are known as major ones in credit reporting, such as Experian, Equifax, and TransUnion.

Once credit reporting agencies were established, there should have been a higher body to regulate their activity and to make sure that there is an accurate job they are doing. This is how FCRA was enacted – to protect consumers from being unfairly treated due to incomplete and/or false information introduced into their credit report.

Federal Credit Reporting Act

This law sees to it that consumers have the right to dispute any wrong information they may find on their credit report issuing a dispute to the respective credit bureaus. These agencies have a period of 30 days to either check the accuracy of their report or remove the errors existing in it.

Another right that the consumer can benefit under FCRA is the annual receiving of a free credit report from the credit reporting agencies. To get this free copy of your credit report you should submit a request and you can proceed in asking for another copy in case you are denied from a new credit that you want to make and the lender indicates the agency that has presented to them a negative credit report.

It is the negative credit report that has determined the lender to decline your request and as such the credit report agency must send you a copy and see according to what negative data you haven’t been approved for the loan.

FCRA can also regulate the period of time under which negative information can be kept on an account. For instance, a delinquency can remain on a credit report for a period of 7 years, a bankruptcy for 10 years and in case there was a tax lien, the time is reduced to 7 years after this one is paid off.