The Fair Credit Reporting Act Of 1971 was created to require consumer reporting agencies to adopt reasonable procedures to meet the needs of commerce for consumer credit personnel, insurance, and other information in a manner which is fair and equitable to the consumer. Essentially, the act was created to insure accuracy and fairness of credit reporting. The FCRA places duties on entities providing information to consumer reporting agencies and limits how the consumer reporting agencies can use credit assessments.
FCRA Key Terms
Consumer Reports; Consumer report means any written, oral or other communication of any information by a consumer reporting agency which includes a consumers credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics or mode of living which is expected to be collected for the purpose of serving as a factor to establish a consumers eligibility for credit or insurance, employment purposes or any other purpose authorized under the statute. 15 U.S.C § 1681a.
Investigative Consumer Reports; is a consumer report which includes information on a consumers character, general reputation, personal characteristics, or mode of living that is obtained through personal interview with neighbors, friends or associates. 15 U.S.C § 1681a(e).
Credit Reporting Agency; Any person which for monetary fees engages in whole or in part in the practice of assembling or evaluating consumer credit information for the purpose of furnishing consumer reports to third parties. 15 U.S.C § 1681a(f). The most prominent credit reporting agencies are Experian, TransUnion and Equifax.
Rights Under the Act
Summary of Rights; The FCRA is designed to help consumers because it protects consumers by requiring the consumer reporting agencies to do the following.
- Disclose your credit file to you upon your request: If you request is a consumer reporting agency must provide you with the information in your file as long as you provide proper identification.
- Limit access to your information: A consumer reporting agency cannot provide your credit report to any party that lacks a permissible purpose. A permissible purpose could be for a loan, credit, service, or employment.
- Consent prior to providing information to an employer: A consumer reporting agency cannot provide credit information to an employer or potential employer without written permission.
- Disputed Information: If you report to a consumer reporting agency that your credit report or file contains inaccurate information the credit reporting agency is required to investigate the matter with any source that provided the information. If the investigation does not resolve the dispute a consumer can add a statement to their credit file explaining the dispute.
- Collect or delete inaccurate information: A consumer reporting agency has to correct or delete from your credit file and information that is inaccurate or cannot be verified.
- Outdated information: Any negative information that is more than 7 years old or 10 years old in the instance of a bankruptcy must be removed from your credit file.
- Marketing lists: upon your request you can “opt out” from allowing consumer reporting agencies to provide your name and address to creditors and insurers who make offers for credit or insurance.
- Disclose your credit score: you have the right to request a credit score, although sometimes a request is met with the fee.
- Identity theft alerts: someone who is a victim of identity theft can place a fraud alert. Also, military personnel were on active duty can place an “active duty” alert on their credit report.
Remedies for Failure to Comply With the Act
A consumer who is affected by a violation of FCRA can collect their actual damages or damages of not less than hundred dollars and not more than $1000, punitive damages, costs, and reasonable attorney’s fees. 15 U.S.C § 1681n.