The Fair Credit Reporting Act (commonly referred to as the FCRA) is a US federal law which forms the base of consumer credit rights in the United States.
Because your credit report contains private information about you, it’s vital that you understand your legal rights as a consumer and aware of all your options. This law regulates what can be reported on your credit report, who have access to your sensitive credit information and what uses can be made of it.
Information That Can Be Included in Your Credit Report
1. Your identifying information
2. Your employment/salary information
3. Credit information (applications for credit cards, payment history, etc.)
4. Public record information
5. Late payments reported by utility companies, hospitals, landlords and others
6. Overdrawn accounts reported by banks
7. Late credit card, auto loan, mortgage payments reported by banks
8. Delinquent child support payments
9. Debts being collected by collection agencies
Information That Is Not Included
1. Your race
2. Your religion
3. Your current health or medical history
4. Your driving record
5. Your criminal record
6. Your political preference
7. Notice of bankruptcy (Chapter 11) that is more than 10 years old
8. Debts that are more than 7 years old
Source: SUMMARY OF YOUR FCRA RIGHTS
Here’s the summary of your rights under the Fair Credit Reporting Act:
The law gives consumers the right to see what is included in their credit report. Previously, the credit reporting agencies were sharing consumer credit history with financial institutions, and consumers were by and large left out of the loop. The law creates more transparency by allowing us to receive and monitor what’s in our credit reports AND see who has received a copy of the report or inquired about it
The FCRA restricts who can access our reports and who can’t. Not just anyone is allowed to do a credit check on you. The law mandates that an entity must have a clear permissible purpose before having the right to pull your credit history.
Here is a list of potential entities who may be able to pull your credit report under certain circumstances:
- Whenever you request for a loan or apply for a credit card, you give the potential lender or credit card company the ability to pull you credit report.
- Utility providers and cell phone companies may be able to run a credit check on you when you apply for new service. Because they are extending you a monthly service, they want to make sure you have a positive history of paying back your debts.
- Employers, landlords, and insurance companies all may be able to check your credit if you apply for a job, an apartment, or a new insurance policy.
- A court of law can also issue a subpoena for your credit history if relevant to a lawsuit.
- Also, a state or local child support enforcement agency has the right to pull a parent’s credit report to establish ability to make child support payments.
- Lastly, you have the right to review your own credit report at any time. Pulling your own credit history will have no effect on your score.
The FCRA also entitles you to accurate representation of your credit report. What this means is that if there are any errors or fraud on your report, you are legally entitled to report & dispute inaccurate information on your report to the credit bureaus or your creditors who thus in turn have the legal responsibility to remove the mistakes usually within a 30-day time frame.
An amendment to the FCRA is the Fair and Accurate Credit Transactions Act of 2003 (also called FACTA or the FACT Act). The FACT Act ensures that you as a credit consumer have access to information that lenders, insurers, and others obtain from any of the credit bureaus.
This new law specifically gives consumers the right to a copy of free credit report once every twelve months from each of the three nationwide credit reporting bureaus – TransUnion, Equifax, and Experian.