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How to Take Advantage of the Fair Credit Reporting
Act (FCRA)
The Fair Credit Reporting Act (FCRA) is a federal law that regulates
your credit information. These days you cannot afford any mistakes or
errors that could negatively affect your credit and your chances
of getting approved for credit. Fortunately, this law promotes the
accuracies of your credit report and protects the privacy of your
information.
The FCRA is actually beneficial to consumers, consumer reporting agency,
and lenders or creditors. It makes clear some of the potential problems
that may arise between you and your credit report, and tries to prevent
that from occurring.
The following are responsibilities of all parties involved in credit
reporting activities.
Credit Reporting Agencies or Credit Bureaus
Credit reporting agencies are
organizations that collect and assemble information about credit
activities of consumers. They hold the databases of the activities and
sell them to lenders or other institutions in the form of credit
reports. Under the FCRA credit bureaus have to:
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Provide you with accurate information and take steps to verify the
accuracy of information disputed by you.
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Remove the inaccurate negative information and notify you within five
days if they want to include it again in your credit report.
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Retain negative information for a period that is allowed by the Fair
Credit Reporting Act. For example, late payments, bankruptcies, tax
liens or judgments, may stay on your credit report from seven to ten
years.
Information Providers and Users of Credit Information
An information provider is a company
that supplies consumer credit information to credit bureaus. They are
usually creditors or lenders, such as credit card companies but they can
also be debt collection agencies and employees.
Under the FCRA, these information suppliers may only report to a credit
reporting agency complete and accurate information. They must
investigate disputed information from you and inform you about the
results of investigation within 30 days as well.
A user is a bank or another organization that requests your credit
report from credit bureaus. They are responsible to notify you when they
take an adverse action against you based on your credit reports and
identify the company that provided the report. This is to make sure that
you can verify and dispute the accuracy and completeness of your report.
Using the Fair Credit Reporting Act for Improving Credit
Here is an easy tip that you can use to protect your credit from any
damage or even increase it.
Always review your records at least
once a year. You are entitled to one free credit report a year from any
of the three national credit bureaus -- Experian, Trans Union, and
Equifax.
You can order your copy of your free credit report online through the
AnnualCreditReport.com. The free credit report may come from any or all
three of the national credit reporting agencies. Alternatively, you can
also order directly with the three credit bureaus for a small fee.
Once you get your report, review it and check for any errors. If you
find any, contact the credit bureau that reports the errors. They are
required to investigate your disputed items within 30 days, at no cost
to you. After investigation, they are required to provide you with
written notice of the results within five days, including a copy of your
credit report if it has changed based upon the dispute.
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