Fair Credit Reporting Act (FCRA) Summary

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:

  • Provide you with accurate information and take steps to verify the accuracy of information disputed by you.
  • Remove the inaccurate negative information and tell you within five days if they want to include it again in your credit report.
  • 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 tell 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 let you know when they take an adverse action against you based on your credit reports and find the company that provided the report. This is to make sure that you can verify and dispute the accuracy and completeness of your report.

Increase Credit with the Fair Credit Reporting Act

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, TransUnion, 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 give you written notice of the results within five days, including a copy of your credit report if it has changed based upon the dispute.

Fair Credit Reporting Act (FCRA) Summary was last modified: April 14th, 2014 by Paul Sarwana