Consumer Credit Reporting Reform Act of 1996

The Consumer Credit Reporting Reform Act (CCRRA) of 1996 was enacted to increase consumer protection from unfair, adverse decisions based on credit reports. The CCRRA amended the Fair Credit Reporting Act that was first established in 1970. Additional protections were created under the Fair and Accurate Credit Transactions Act of 2003. The CCRRA is important because credit reports are used by many businesses for employment and application decisions.

Basics

The CCRRA requires employers to inform applicants and employees in advance if a credit report will be obtained. In fact, employers should have written permission from applicants and employees before requesting credit reports. The CCRRA also establishes stronger regulations of credit reporting agencies in order to minimize the reporting of false and inaccurate information.

Features

If a credit report is used in the decision making process to deny or reject an application, applicants or employees must be notified. For example, if a landlord rejects a rental applicant, the landlord must provide information about the credit reporting agency that was used, including the name, address and phone number. After an adverse decision has been made, consumers have 60 days to request a free copy of their credit report.

Relevance

The federal government has passed legislation to ease consumers' ability to dispute false information. All credit reporting agencies are required to address disputes as well as process security freezes and fraud alerts to prevent unauthorized releases of consumer credit information.

Tips

The major credit reporting agencies are Experian (experian.com), Equifax (equifax.com), and TransUnion (transunion.com). Each offers an array of services that relating to consumer credit information. Under the CCRRA, individuals are able to request a free credit report (which excludes your FICO credit score) through the only authorized website, annualcreditreport.com. Be careful as unrelated businesses have created similar websites, such as creditreport.com or annualcreditbureaureport.com.

Issues

Unfortunately, despite increased regulations, consumer credit information remains unsecured. When applying for credit, such as personal loans, mortgages, and credit cards, your credit report is requested and reviewed. However, inaccuracies plague credit reporting agencies as a result of growing identity theft. Sensitive personal information is stolen every day. Consumers are at risk, especially as many businesses and organizations, including banks, hospitals and schools, request social security numbers to identify individuals. Plus, websites, such as publicdata.com, disperse information without ensuring that appropriate authorization has been provided.