The Fair Credit Reporting Act was signed into law in 1970. Until this, there were no federal laws requiring accurate consumer reporting. It was crafted to protect consumers by regulating how the consumer reporting agencies (Equifax, Experian and TransUnion) use the credit information gathered and by limiting the number of people and agencies that can view this information. For consumers, the most important section contains the rights you have under the law. These range from accessing credit reports to suing for damages from individuals or agencies that misuse credit information.
For anyone not familiar with credit reports yet, they are broken down into four sections:
- Identity – This section displays your name, address, date of birth, social security number (last four only) and current employer information.
- Credit Information – Information on credit accounts (i.e. loans, mortgages and credit cards). Details include when each account was started, limits and a two-year payment history. Negative information on accounts usually remains for seven years.
- Public Records – This includes transactions such as bankruptcy, divorce, foreclosure, liens and purchase of property.
- Recent Inquiry – This is a list of every agency and individual who has received a copy of your report for the last two years.
- Access By You – You can request a free copy of your credit report once a year from any of the three agencies mentioned above. This request can be made by phone, mail or through internet access. Reports must arrive within 15 days. You can also request your credit score from each agency to compare. This usually requires a small fee paid to each agency.
- Access By Others – This part of the law ensures that only an agency or individual with a reasonable need can access your information. That list includes collection agencies, insurance companies and landlords. Employers or potential employers can only access your information with your permission. Family members, even spouses do not have legitimate access.
- Accuracy – If you discover false or outdated information such as a series of missed payments or an account that was closed over seven years ago, you can request that this information be re-examined and deleted. If the information cannot be verified, the agency you’ve contacted (Equifax, Experian or TransUnion) has a responsibility to remove it. If the problem is not resolved to your satisfaction, then you may submit a statement explaining the problem that will be a permanent part of your report until you decide to remove it.
- Know Why Credit Was Denied – If you are denied by a credit card company or other business, you can ask for the specific reason why. This is at no cost to you.
- Medical Privacy – There should never be medical information on your credit report. The Fair Credit Reporting Act absolutely prohibits the use of medical information in credit decisions.
- Notification of Negative Information – If a financial institution submits or even plans to submit negative information on you, they are required to inform you. Notification can be in the form of a default notice or as part of a billing statement.
- Protection of Personal Information – Your Social Security number will have only the last four numbers shown on any report given out. The law also requires every credit and debit card receipt cut off your account numbers to the last four digits as well. This second aspect keeps people from getting your account information out of the trash.
- Stop or Limit Unsolicited Offers – You have the right to have your name and address struck from “pre-approved” credit card and other offers. To do so, simply call 1-888-567-8688 or 1-888-5-OPTOUT.
- Suing For Damages – If an individual or agency violates the Fair Credit Reporting Act with your information, you have the right to sue for damages in either state or federal courts.
In addition to these, there are other protections granted under three complimentary acts contained with the Fair Credit Reporting Act:
The Credit CARD Act
The Credit Card Accountability, Responsibility, and Disclosure Act was signed by President Obama on May 22, 2009. The purpose was to establish fair and transparent practices to benefit consumers with the credit card plans, and debt.
- Fair – Credit card companies are not prohibited from abusive tactics such as raising the interest rates on an existing balance, or allowing the credit card holder to go over their balance then charge a fee on that overage.
- Transparency – The act attempts to make the fees and rates on credit cards more transparent so the consumers can better understand and compare various credit cards.
In a survey conducted by the consumer financial protection bureau, 60% of people said it was easier to understand their credit card bill after the CARD act was passed.
Signed into law in 2010 to prevent situations that led to the housing market crash and recession which began in 2007. For the consumer, it created an independent system to monitor the information given to consumers for accuracy.
The Fair and Accurate Transactions Act was developed specifically to protect the victims of identity theft and active duty military personnel. Additional rights now include:
- Place a Fraud Alert on Credit Reports – With this, creditors now require more information before opening accounts or changing data such as an address or phone number under your name.
- Receive Free Credit Reports – This is one each from the consumer report agencies to look for warning flags such as a change of address or an unknown credit card.
- Receive Debt Collection Data – If you receive calls from a debt collection agency over a fraudulent transaction, you have the right to get all data, such as the name of the creditor and the date of the transaction.
- Request Copies of Fraudulent Transactions – This may require providing proof of identity theft such as a police report.
- Setting a “Block” on Fraudulent Information – If you can prove identity theft, this blocks all related transactions that negatively affect a credit score. Victims can also request that businesses stop reporting all fraudulent transactions as well.
Active Duty Alert
In addition to these rights, active duty military personnel can also place an “active duty” alert on their credit reports. Once in place, creditors must take additional precautions to establish identity before opening any new accounts or changing relevant data.
Thanks to the Fair Credit Reporting Act and its complimentary legislation, consumers have an excellent list of rights and support from both the federal government and the consumer reporting agencies. If you’re interested in reading the complete document, the Federal Trade Commission has it available for you free at their website. It is in PDF format and can be viewed online, downloaded and/or printed.