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Understanding the Fair Credit Reporting Act: Your Rights and Protections
Table of Contents
FCRA Definition
The Fair Credit Reporting Act (FCRA) was designed to protect American consumers from having fraudulent information reported on their credit scores that would make them ineligible for financial credit. The law was initially passed in 1970 and has been amended twice since it was passed. The law primarily targets the three leading credit agencies in the United States, which are TransUnion, Experian, and Equifax. The law also applies to any agencies, banks, or credit unions that collect financial records as well as agencies that collect history records
What Do Credit Reporting Agencies Do?
Credit reporting agencies are responsible for organizing credit information about consumers. The credit reporting agencies have diverse information on over 200 million Americans. These agencies sell the credit information they have to help businesses make important decisions about whether to give credit or approve a loan. The primary source of information that credit reporting agencies have, is from information suppliers or any business entity that extends credit to customers. Based on the information received, the credit reporting agency will generate a score that predicts a customer's creditworthiness based on their specific algorithms.
What Rights Does the Fair Credit Reporting Act (FCRA) Guarantee?
There are several distinct sections of the Fair Credit Reporting Act (FCRA). The main important sections are outlined below:
Basic Rights
The Fair Credit Reporting Act (FCRA) guarantees that Americans have the right to:
- Assess their credit report once per year for free.
- Protected access to their credit information and the right to know who has requested their credit information.
- Accurate reporting of information and if there is a mistake, 30 days to have it corrected.
- Removal of outdated information after seven years.
- Medical information does not have to be on a credit report.
- Request to be removed from unsolicited credit offers.
- Businesses are not permitted to put full credit card numbers on receipts.
- Notification of potentially negative information that will be added to their credit report.
- Know their credit scores.
- Be aware of when their credit report is being used against them.
Dodd-Frank Act
The Dodd-Frank Wall Street Reform along with the Consumer Protection Act (DFA) was passed in 2010 with the objective of preventing major financial institutions and creditors from engaging in unfair practices and to prevent another substantial recession from occurring after 2007. The DFA instigated a watchdog system through the Consumer Financial Protection Bureau to monitor information given to consumers to ensure that they are provided with clear and accurate credit information. Bailouts were prevented so that taxpayer dollars were not able to be used to save failing financial institutions. The Volcker Rule is within the DFA and is aimed at restricting large banks from making high-risk, speculative, investments with funds from their own accounts. Within the framework of the DFA, the Financial Stability Oversight Council was created to monitor the financial system and carefully watch companies whose practices cause a substantial threat to the United States economy. In addition, the SEC Office of Credit Ratings was created to protect investors from the risks involved with investing in bonds, asset-backed, and notes-related securities.
Credit Card Act
The Credit Card Accountability, Responsibility, and Disclosure Act states that credit card companies are not permitted to increase their interest rates on an existing balance. This act also requires credit card companies to provide at least 45 days of notice before increasing the rate on new account balances. Credit cards must also keep consistent and regular payment deadlines.
Fair and Accurate Credit Transactions Act
The Fair and Accurate Credit Transactions Act allows consumers who have had their identity stolen to repair their credit reports if they have been damaged. The Fair and Accurate Credit Transactions Act is particularly targeted at identity theft victims as well as military personnel.
FCRA Glossary Definition
The Fair Credit Reporting Act (FCRA) is a federal law that regulates federal reporting agencies. The statute that outlines the Fair Credit Reporting Act (FCRA) is 15 U.S. §1681a. The Fair Credit Reporting Act (FCRA) compels credit reporting agencies to ensure all the information that they gather and distribute is accurate. The Fair Credit Reporting Act (FCRA) is very important within the United States because it protects the financial interests of citizens and their eligibility to have sufficient credit for home mortgages or lines of credit.