Most consumers aren’t familiar with the Fair Credit Reporting Act, but this law protects you in a number of important ways. The FCRA regulates the credit bureaus from sharing your credit history with just anyone, gives you access to your credit report and scores, and gives you the right to dispute inaccurate and outdated information on your report.
Credit report privacy. Thanks to the FCRA, not just anyone can see your credit report. There are strict guidelines in place under which the credit bureaus can share your credit history with others.
Here are the only circumstances in which your credit report can be pulled:
- When the credit report will be used by an organization to determine whether or not to extend you credit
- With your written permission
- When an employer is considering hiring you for a job (and has your written permission)
- When an insurer is deciding whether to grant you insurance
- Under a court order signed by a judge
- By the government to check your eligibility for certain benefits
- By a state or local child support enforcement agency to determine your capacity to make child support payments
- By your current creditors
- By anyone else who has a “permissible purpose,” such as a landlord or a car dealer
Access to your credit reports and scores. Before the FCRA, credit bureaus were freely sharing your credit history with lenders and consumers were left almost entirely out of the loop. Consumers had no idea what information was being reported about them. Now, we have the right to see any and all information that the credit bureaus keep on file for us. Not only does the FCRA entitle us to one free credit report from each bureau every year (visit www.annualcreditreport.com to get yours) but it also gives us the right to purchase our credit scores and reports as often as we like. Credit bureaus must also disclose on our credit reports the name of all those who have furnished the information that appears on our report, as well as a list of anyone that has pulled our credit in the past year. Credit bureaus must also provide you with a summary of your rights under the FCRA, including your right to obtain a credit score.
An accurate and up-to-date credit report. The FCRA charges credit bureaus with the task of ensuring our credit reports are free of mistakes, and that negative information older than seven to 10 years is dropped from our reports. If you find errors on your report, it is important to alert the credit bureau that provided it. The bureau must then launch an investigation (which usually means contacting the creditor that furnished the information in the first place). The bureau must resolve all disputes within 30 days (or 45 days, if the report was obtained through annualcreditreport.com) and notify you in writing of the results. If the bureau finds the information to be inaccurate, it must remove it from your report. If the bureau does not respond to your dispute within the allotted time period, it must drop the information from your report regardless of its accuracy.
The FCRA is also very clear about the length of time that negative information (like payment delinquencies, charge-offs, and bankruptcies) can appear on your credit report. While positive credit history can remain indefinitely, negative information can usually only stay for a period of seven years (10 years at the max). This includes public records information like bankruptcies, court judgments, and tax liens. If you see negative information on your credit report that is older than seven to 10 years, contact the credit bureau to ask that they drop it from your report. Once information is removed from your credit report, it can no longer be factored into your credit score.
This article is a guest post from Carrie Davis, the lead columnist for SpendOnLife.com, an online resource dedicated to ensuring readers have the latest and most thorough information on credit, debt, and identity theft. She is FCRA-certified and has a passion for educating others on how to achieve financial independence.