Everything You Need to Know about the Fair Credit Report Act

The Fair Credit Reporting Act (FCRA) is a federal law that regulates how consumer credit information is collected, used, and disseminated. Enacted in 1970, the law has been amended several times and is an essential consumer protection law for borrowers.

The primary purpose of the Act is to enhance fairness and accuracy in credit reporting, and it applies to independent credit reporting agencies and the credit reporting services offered by banks, lenders, and other financial institutions. Here’s everything you need to know:

Fair Credit Reporting Act: How Does it Protect You?

The FCRA ensures that credit reporting agencies and creditors follow specific rules and regulations when collecting and distributing credit information. Under the Act, all credit reporting agencies are required to:

• Only collect and report accurate credit information

• Maintain accurate files

• Provide individuals with a copy of their credit file upon request and free of charge if a report is inaccurate

• Notify consumers if negative information is added to their credit report

• Allow for the correction of any errors on their credit reports

• Protect consumer’s credit information from identity theft or data breaches

If you’re ever a victim of incorrect credit reporting, the FCRA protects your rights and gives you options to correct it.

What Are Your Options If You Fall Victim to Incorrect Credit Reporting?

If you believe that your credit report has factual errors or contains information that belongs to someone else, you should immediately contact the credit reporting agency that provided you with the report.

Under FCRA, credit reporting agencies are required to investigate and review all claims of errors and omissions. After the investigation, the agency must provide you with a written summary of the results, information on how they resolved the dispute, and an updated copy of your credit report.

If you are unsatisfied with the resolution, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state attorney general office.

The FCRA also allows you to dispute errors directly with your creditor, who must then investigate and correct any errors they find. If they refuse to do so, you can file a complaint with the CFPB or take legal action.

It’s essential to regularly check your credit report to ensure that the information reported is accurate. By doing so, you can correct any errors before they cause any significant problems and keep your credit score in good shape.