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Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is the federal law enforced by Federal Trade Commission to promote accuracy and fairness, and to ensure the privacy of information used in your credit reports. It regulates the functioning of credit bureaus and has been in effect since 1971. The act has been amended from time to time to expand the rights of the consumers and improve regulation of credit bureaus.

Areas Covered in FCRA

The major areas FCRA deals with are:
  • Permissible purposes of credit reports
  • Requirements relating to information contained in credit reports
  • Disclosure of investigative credit reports
  • Compliance procedures
  • Procedures in case of disputed accuracy
  • Charges for certain disclosures
  • Requirements on users of consumer reports
  • Obtaining information under false pretenses
  • Unauthorized disclosures by officers or employees.
Thus, the act defines who can access your credit report and your right to know about this. It also provides you right to review and dispute the information contained in your credit report.

Consumer's rights under the FCRA

The major consumer's rights under the FCRA are:
  • Right to receive a copy of your credit report on request. This copy must be up-to-date and all the information in your file at the time of your request must be included.
  • Right to know who has accessed your credit report in the last one year for most purposes. However, in case of employment purposes the period is two years.
  • If you have been denied credit by any agency, then the right to know the name and address of the credit bureau on whose credit report the denial was based.
  • Right to receive a free credit report from the credit bureau:

    Within 60 days of denial of your application, if the credit denial is based on credit report supplied by the credit bureau.
    - If you believe that your credit report is wrong because of fraud
    - If you are unemployed and will be applying for a job within 60 days
    - If you are on welfare/public benefits

  • Right to contest the accuracy and completeness of information in your credit report.
  • Both credit bureau and the information provider have the obligation to correct the inaccurate or incomplete information in your credit report.
  • File a dispute with the credit bureau and information provider to the credit bureau if you feel that the information in your credit report is inaccurate.
  • Right to include a summary explanation to your credit report if you feel that the dispute is not resolved to your satisfaction.
  • Right to seek your consent before credit bureau supply your credit report to your employer or prospective employer.
  • Right to seek your consent before credit bureau supply information about your credit history to creditors, insurers and employers.
  • Right to choose to exclude your name from credit bureau lists for unsolicited credit and insurance offers.
Under the new amendment in FCRA, by September 2005 consumers in all states will have the right to receive at least one free credit report per year from each of the three credit bureaus. Consumers in some states such as Colorado, Georgia, Maine, Maryland, Massachusetts, New Jersey, and Vermont are already receiving this facility.

The FCRA also has provisions for punishing unauthorized persons for obtaining information from your credit report under false pretenses and unauthorized disclosures by officers or employees of the credit bureaus. For more information, see the full FCRA act (in pdf).

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