How to Understand the Fair Credit Reporting Act

As a consumer, you have rights in regards to the kinds of information that can be collected about you by various credit reporting agencies and used by creditors in determining whether to extend credit to you or not. The Fair Credit Reporting Act is a regulatory tool to safeguard those rights for you. There are some key steps to understanding the Fair Credit Reporting Act and how it protects your rights as a consumer to “accurate” and “fair” gathering and sharing of the information used to determine your credit status.

Instructions

Difficulty: Easy

1. Any agency that collects and maintains credit information about a consumer must disclose those records in a credit report made available at a consumer’s request, to ensure that the information maintained in those records is correct
2. Since 2003, consumers have also had the right to receive a single copy of their credit report once a year without cost.
3. If you feel that your credit report contains errors, you have the right to dispute them and to have your claim fully investigated by the credit reporting agency responsible for the errors in your credit report.
4. When a consumer disputes information contained in a credit report, credit agencies must make a concerted effort to determine if the information is factual or not. The credit reporting agency must then make a written report of those findings available to the consumer.
5. Information that has been found to be incorrect and removed from a consumer’s credit report may not be placed in the report again without first notifying the consumer of this intended action at least 5 days before such action is taken.
6. If your credit is deemed “unacceptable” and used against you by an insurance company, credit card issuer or an employer, you’re entitled to receive a report from these entities naming the credit reporting agency from whence the “unacceptable” credit information was obtained.
7. Agencies that gather and maintain information used in determining a consumer’s creditworthiness may not keep information that is detrimental to a consumer’s credit rating (such as bank foreclosures, loan defaults, and bankruptcies) for more than seven years under the protection of the Fair Credit Reporting Act.

Tips & Warnings

• If you find an error on your credit report, contact the credit reporting agency immediately. Don’t ignore errors as they can keep you from securing the credit you deserve when you need it most.
• You can make initial contact with a credit reporting agency by phone and the internet. But always remember to follow this up with a written and signed letter disputing the information contained on your credit report.
• Keep copies of all correspondence sent to a credit reporting agency and the response letters from them in case you need them for evidentiary purposes later on.
• To get a single copy of your credit report once a year without cost visit the Web site listed below.
• Sending correspondence that requires the recipient to “sign upon receipt” is also excellent to keep with your other records of correspondence with a credit reporting agency.
• Keep communications with a credit reporting agency to a minimum by being as clear and concise in your correspondence as possible, and by providing the evidence needed to prove your dispute of the information contained in your credit report.
• Making too many contacts with a credit reporting agency can make it appear that you have more than the norm of credit extended to you. This is often a sign of those with credit issues that creditors are on the lookout for.

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