Obligations of a Consumer Credit Reporting Agency
The obligations of a consumer credit reporting agency (CCRA) are governed by the Fair Credit Reporting Act (FCRA) and the Fair and Accurate Credit Transactions Act (FACTA). CCRAs are companies that gather information about individuals from the consumers' creditors and from public records. The information they collect is complied into a report and made available to other potential creditors and employers.
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Function
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In the United States, there are three main consumer credit reporting agencies: Experian, Trans Union and Equifax. The information that is assembled by CCRAs is usually sold to companies that grant credit to individuals. Many of these same companies report details of your payment history, on a monthly basis, to one or more of the CCRAs.
FCRA
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The Fair Credit Reporting Act was passed in 1970. This regulation was designed to provide the basic guidelines regarding the obligations of a CCRA. The goal of the act is to "promote accuracy, fairness and the privacy of personal information." These companies must follow "reasonable procedures" as they relate to safeguarding an individual's privacy, data correctness and significance of the information being reported in credit files. CCRAs are expected to follow guidelines that enable consumers to retrieve information contained in their files and have inaccurate data corrected.
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FACTA
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The Fair and Accurate Credit Transaction Act was passed in 2003. Its purpose is to provide additional protection to consumers against identity theft and to clarify additional obligations of a CCRA. To combat identity fraud, CCRAs must give consumers one free credit report annually, follow specific procedures for change of address requests and allow consumers to block certain items that appear on their credit report as a result of fraud.
FICO
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FICO is an acronym for the credit score calculation software created by Fair Isaac and Company. It refers to the credit scores calculated by the three primary credit reporting agencies. Lenders use these scores to determine the credit risk of an individual. Each credit reporting agency has its own name for FICO and calculates it based on the information contained in your credit file. The three scores decide what loan terms, such as interest rates and discounts, you may receive from creditors. Some lenders have their own in-house system for computing credit scores.
The obligations of a CCRA regarding FICO consist of the following requirements: A minimum of one account must show on the report as being open for at least six months. Each of the reports is required to have, at minimum, one account that has been updated in past six months.
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Inaccurate Reports
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Individuals who disagree with any data contained in their credit file have the right to contact the CCRA in writing and make a request to check and verify the disputed information. This is one of the obligations of a CCRA under the Fair Credit Reporting Act. A CCRA typically has 30 days to check the disputed item or remove it from the credit report.
Whenever a correction is made to a credit report, the CCRA is obligated to send a notice of the change to any creditor who has accessed your credit file in the last six months. In cases where the CCRA refuses to correct the information, you have a note, up to 100 words, added to the file, which explains your version of the negative item. The federal regulation states that sending this note to potential creditors is among the obligations of a CCRA.
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