Fair Credit Reporting Act: What is the Fair Credit Reporting Act?
It is very important that the personal information of consumers is protected. Without any type of protection, it is possible that the personal information of consumers can end up in the wrong hands. Consumers could find themselves in positions where they become victims of fraud, or they could have a number of unauthorized accounts on their credit that could harm their credit history. The Fair Credit Reporting Act was created to protect the rights of consumers so that consumers can keep their personal information and good credit intact.
The Fair Credit Reporting Act
This federal law protects the rights of consumers by regulating the actions of credit reporting agencies. A few of the private credit agencies are Experian, TransUnion, and Equifax. These agencies keep records of consumers’ payment histories, judgments, active and closed accounts, personal identification information, and public record data. Lenders depend on the information gathered by the credit reporting agencies to make decisions regarding lending credit to consumers.
The Fair Credit Reporting Act (FCRA) has strict regulations and responsibilities for the individuals and groups reporting the information to credit agencies. Unauthorized persons and employees who supply or obtain credit reports can be punished under the FCRA.
The Responsibilities of Credit Reporting Agencies
Credit reporting agencies have the right to gather and provide personal information about consumers for the purposes of employment or credit evaluation. The information is kept in a database and updated on a regular basis. The responsibilities of the credit reporting agencies include:
- Provide a free credit report to consumers once per year. The credit reporting agencies must provide consumers with the information contained in their files, and they must take measures to ensure that the information is as accurate as possible. They must also verify that the information that consumers dispute on their credit report is accurate.
- They must verify negative information on credit reports. Sometimes negative information is removed from a credit report after information is provided that proves the information is inaccurate, but if new information proves otherwise, the information can be placed back on a credit report. The credit agencies are required to notify consumers in writing within 5 days before reinstating disputed information on a credit report.
- Negative information must be removed from a credit report after a certain period. The FCRA provides the credit reporting agencies with specific criteria for how long they can keep negative information regarding tax liens, late payments, bankruptcies, and judgments on a credit report. Most negative information can remain for up to seven years from the date of the late payment, but others can remain for 10 years or more. In some cases, the information is removed as soon as the negative information is cleared.
The Fair Credit Reporting Act is in place to protect consumers’ personal information regarding their accounts and public records. There are specific responsibilities that credit reporting agencies and employees must follow to remain in compliance with the FCRA. Consumers should always remember to get their free yearly credit report each year from the three major credit reporting agencies so that they can protect their personal information.