Understanding Your Rights Under the Fair Credit Reporting Act (FCRA)

In 1970, the law governing the activities of the three major credit reporting agencies, known as the Fair Credit Reporting Act or FCRA, was passed in an effort to provide a specific set of rights for consumers. The FCRA is focused on safeguarding the information gathered, maintained, and shared by the credit reporting agencies, namely Equifax, TransUnion, and Experian, but extends its reach to cover similar information used within other systems, such as employers, housing, and banking.

Within the FCRA, specific guidelines are shared which spell out how information can be used for or against consumers, making it important to understand your rights under the law. Here’s what the FCRA provides to you as a consumer.

Access to Your Credit Report

The most prominent right you have as a consumer protected under the FCRA is your ability to access your credit report easily. Guidelines in the FCRA state that the credit reporting agencies must provide your credit file upon your request no less than once per year. This site allows you to access your credit report at no cost each year, but it is your responsibility to request it.

Limited Access from Outside Parties

Protections against unnecessary access to your credit are built into the FCRA, specifically limiting the availability of your personal credit history and information to those who have a valid, verifiable need to access it. A number of organizations may request information on your credit history, including banks or credit unions, insurance companies, property managers or landlords, or insurance companies, for the purpose of verifying your past financial activities. While these entities are often provided access to your credit information upon request, you have the right to know who, when, and for what purpose the information was accessed.

Accuracy in Reporting

A significant component of the FCRA is the requirement of the credit reporting agencies to analyze disputes of inaccurate information from consumers. If erroneous information has been discovered within your credit file, a credit reporting agency is mandated to examine the details of that entry within 30 days. When the data cannot be verified as correct or incorrect, it is the agency’s responsibility to remove it. If a disputed entry cannot be removed, you have the right to add a note to your file explaining your position.

Removing Negative Information

Negative information listed within your credit file can linger for a substantial period of time, making it difficult to move ahead in your financial life. Under the FCRA, you have the right to request negative information be removed from your credit report after seven years. It is important to note that major negative entries, like bankruptcy, may remain on your report for up to 10 years.

Protection against Disclosing Personal Account Information

Quite a bit of information is included in your credit report that extends well beyond current account information. Previous addresses, past employers, your date of birth, social security number and account numbers are all provided within a personal credit file. The FCRA protects this sensitive information from being shared in an unsafe manner. For instance, businesses are required to list only a portion of your credit card or bank account information on a printed receipt, and your full social security number is no longer included on your credit report. These safeguards help protect you against identity theft.

Denial Information

The FCRA also requires that you are made aware whenever your credit is used against you. For instance, if an application for a new credit card or loan is denied, you have the right to know the reason for the denial. Businesses that use your credit report to make a decision about offering new credit are required to provide you information about denials in writing, at your request.

Seeking Damages

Individuals also have the ability to seek compensation for damages under the FCRA. Credit reporting agencies, creditors, and any other organization that regularly uses credit reports may be liable if they misuse or otherwise violate the act.

Your credit report is one of your most powerful assets. Strong credit paves the way for new credit accounts with affordable interest rates, not to mention provides a snapshot of your financial reputation. The FCRA was signed into law in an effort safeguard that assets by setting specific regulations against the unlawful use of your credit information. It’s important to understand the rights laid out in the FCRA and how you are protected as a consumer using credit.