Safeguards For Consumers In The Federal Credit Reporting Act
In 1970, the United States government enacted the Federal Credit Reporting Act or the FCRA. This law regulates the collection and dissemination of consumer credit information. It ensures the accuracy, justice and privacy of individual credit information that is compiled by credit reporting agencies. The most recent amendment to the law was in December 2003.
Credit reports are highly utilized in the United States. Initially a credit report was used only to assess the creditworthiness of a person for the purpose of acquiring credit. Now credit reports are used for other things like insurance underwriting and even employment applications. At the present time it is entirely lawful for someone to be turned down for insurance coverage or employment on the basis of the information enclosed in a credit report. A person can even be terminated from a job based upon credit report information.
Credit reporting agencies are businesses that collect and compile credit information on consumers. There are three major credit bureaus in the United States. They are TransUnion, Equifax and Experian.
The FCRA was enacted to guard consumers from incomplete, unreasonable and inexact information on a credit report. It gives consumers the right to dispute and challenge any information on a credit report that is considered to be inaccurate or erroneous in any way. If there is untruthful information showing on your credit report you have the opportunity to issue a dispute to the credit bureaus. They will have 30 days from acknowledgment of your dispute to either validate the truthfulness of what they are reporting or delete it from your report.
The Federal Credit Reporting Act also presents consumers the right to obtain one free credit report each year from each of the credit bureaus. This does not happen routinely but only after a request has been made. You are also entitled to a credit report whenever you are denied credit based upon the information on the credit report. Whichever credit bureau is reporting the negative information must issue the report to the consumer upon request.
Often bad credit listings are deleted from credit reports after a dispute because the credit bureaus were unable to prove the correctness within the time period. If information is removed the credit bureaus can’t reinstate the listing without notifying the consumer in writing.
The Federal Credit Reporting Act also clearly outlines the period of time that derogatory information can be retained on a credit report. Most often all listings can only remain on the credit report for 7 years from the time of delinquency. A bankruptcy can stay on the report for 10 years and a tax lien can remain for 7 years after it is paid off.
A consumer should take the time to provide a dispute if they have any uncertain information on their account because it has been estimated that as many as 40% of all disputes end up getting the information deleted from the report because it could not be substantiated within the time limit. If the information is derogatory but truthful and accurate it should not be disputed but should stay on the report for the specified time period.
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