Credit Bureau Laws
A person's creditworthiness is an extremely important asset, and one given a high priority by lenders. Several major pieces of legislation regulate credit bureaus, the organizations responsible for collecting and standardizing credit information. Every aspect of the credit system is subject to stringent rules, although not all of them necessarily serve the interests of consumers.
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Significance
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Legislation pertaining to the U.S personal credit system began appearing in the 1960s and 1970s, when personal credit in the form of credit cards and loans became a huge industry with far-reaching implications. Personal credit performance is evaluated using a credit score, and can affect a person's ability to secure loans, lines of credit, even housing and employment--credit scores are increasingly seen as a measure of personal integrity.
Fair Credit Reporting Act (1971)
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The Fair Credit Reporting Act law regulates the conduct of credit bureaus, with its most important aspect being the right of consumers to challenge their credit history and have incorrect information removed. The act also prohibits the release of credit information without consumer consent or court order. And even with consumer consent, only legitimate businesses may be given information.
Errors found on a report must be shared with all other bureaus, and in case of denial, bureaus must provide consumers with a copy of their credit file, citing reasons for said denial. Disclosure is also important--bureaus must release information to file holders upon request.
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Equal Credit Opportunity Act (1975)
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Similar to other equal opportunity acts, the Equal Credit Opportunity Act also regulates the collection of personal information beyond what is immediately pertinent to financial performance. Age, sex, national origin, religion, race and welfare benefits are all off-limits. This law requires credit bureaus to specify the exact reason for denial.
Fair Credit Billing Act (1975)
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The Fair Credit Billing Act offers protection for credit histories in dispute. The upshot for consumers is that when they choose to dispute an item on their file, credit bureaus are prohibited from adversely affecting their credit ratings and in most cases are ordered to put said file on hold until the dispute is resolved.
Right to Financial Privacy Act (1979)
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Similar to the Fair Credit Reporting Act, the Right to Financial Privacy Act regulates the accessing of personal credit information. The emphasis here is on prying government agencies, as the act requires that consumers be made aware of any investigation barring court order. Credit bureaus are therefore not allowed to furnish private information even to federal agencies.
Credit Bureaus
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There are three major credit reporting bureaus in the United States--TransUnion, Experian and Equifax. These organizations sell information to merchants, landlords, employers and financial institutions that wish to inquire about a potential customer, tenant or employee. Officially, these credit bureaus are known to government agencies as CRAs--consumer reporting agencies.
Government Agencies
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Credit bureaus are the responsibility of both state and federal agencies. On a local level, the state attorney general can take action in any case involving credit bureaus. However, the two most prominent authorities in this field are the U.S. Federal Trade Commission and the Federal Reserve, who are responsible for enforcing the various credit-related acts.
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