The Federal Fair Credit Reporting Act (FCRA) is a law that gives consumers certain rights when companies include your credit report in a decision-making process.
It is designed to ensure:
• The accuracy of an Individual’s Credit History.
• Fairness for Everyone, no matter their status.
• Consumer Privacy Rights.
Several types of consumer reporting agencies play a role in credit reports. Some can even be hired to obtain information like check writing history, medical history, and even rental history. Let’s take a look at the rights offered by the FCRA.
The Right of Notification:
Individuals must be informed if their credit report has been used to deny them credit. This includes companies that:
• Deny Credit
• Deny Employment
• Deny Insurance
The company that denies any credit request is required to give the applicant the name, address, and phone number of the agency that provided them with the information they used for declination purposes.
The Fair Credit Reporting Act gives everyone the right to know the details of how their credit score is calculated. Therefore, all individuals can request this information, and by law, it must be provided. The provider will require government issued identification and in most cases, a social security number. Furthermore, the information must be given without cost if any of the following apply:
• The Information is being used to deny credit.
• The Applicant is the victim of identity theft.
• The credit report contains inaccurate information.
• The applicant is unemployed and expects to apply for a job within the next 60 days.
• The applicant is on public assistance.
All individuals are entitled to a free credit report once every 12 months. This is true even if the above conditions are not met.
Everyone has the right to ask for their score. A credit score is simply a number that represents a calculation of one’s creditworthiness. It’s important to note that while everyone is entitled to request their credit score from consumer reporting agencies, it is not free. However, some lenders will provide the score free of charge.
The Right to Dispute Inaccurate Information
If a person notices something that is either incomplete or incorrect, they have the right to dispute the claim. At that point, the reporting agency will either remove the information or verify it. This normally happens in 30 to 60 days. If the information remains on the report, then it has been confirmed as being accurate. On the other hand, if they cannot verify it, then it will be removed and a new score calculated.
Credit reporting agencies will likely not list outdated information. Outdated information is normally defined as anything older than seven years. Bankruptcies are unique and take ten years to be removed.
Access is Limited
Only those with a valid need to access a report are given access. This includes lenders, employers, or other businesses. The FCRA specifies those with a valid need.
Must Give Consent for Reports Provided to Employers
An individual must give written consent before employers are allowed to request their report. Consumer reporting agencies are not allowed to give out any information to employers without written consent. Trucking companies are an exception to this rule as they are allowed access to all records for safety reasons.
Individuals are given the right to have their name removed from any “prescreened” offers. All insurance companies and lenders must include a toll-free number that allows a user to call and remove their name.
The Right to Seek Damages
Finally, individuals have the right to seek damages from violations of the Fair Credit Reporting Act. Any agency who violates these terms are subject to federal lawsuits.