The use of credit enables many consumers to finance their education, home, car and many other necessities and luxuries. The information tracked on consumers and their credit habits provides useful insight to many organizations, and protecting this information has become paramount so consumers do not become unknowing victims of predatory schemes or other unfortunate events. Consumers have a right to know what information resides in their credit file, so they can manage it and have it protected.
Consumer Reporting Agencies
The Fair Credit Reporting Act (FCRA) regulates consumer reporting agencies. These agencies, also known as credit bureaus, function as private companies that collect information about consumers and assemble it into a credit report and credit score. The information gets collected from banks, public records, taxing authorities and various companies and creditors. The three main credit bureaus are Experian, Equifax and TransUnion.
Fair Credit Reporting Act (FCRA)
Although the FRCA is a complex piece of legislation, knowing some of the key points is helpful when consumers seek to understand how to protect their credit information and score from mistakes, unscrupulous users or outdated information. Generally, the FCRA serves as federal legislation that regulates how people's information gets used by the credit reporting agencies.
Control of Information
The FCRA requires consumer reporting agencies to limit access to a person's information by only sharing data for permissible purposes, such as loan or credit applications or for a service or employment screening. The agencies also must obtain an individual's consent before giving her information to an existing or potential employer. Additionally, the agencies must allow victims of identity theft to place a fraud alert on their credit record, and they must allow military personnel to place "active duty" alerts on their credit record when serving in a location different from their usual duty station.
Accurate Information
Consumer reporting agencies have a requirement to correct inaccurate information. If the data is disputed by the consumer and is not verifiable, the agency must delete it from the consumer's record. The agency has no obligation to remove any accurate data, unless it becomes outdated.
If a consumer reviews her credit report, finds inaccurate information and files a dispute, the credit reporting agencies have the obligation to investigate the issue promptly. The agency will follow up with the original provider of the disputed information, and if the matter is not resolved to the consumer's satisfaction, the consumer can add an informative statement to his credit file with an explanation of the situation.
The credit reporting agencies must also remove negative information that has become outdated. Information more than seven years old qualifies as outdated, except for bankruptcies, which stay on a credit record for 10 years.
Free Credit Reports
The agencies have the obligation to disclose an individual's credit file to them on request if proper identification is provided. Each individual has the right to obtain a free copy of one credit report every 12 months from each of the three main credit-reporting agencies. The only company authorized to provide these reports to consumers at no cost is AnnualCreditReport.com. Consumers may also contact the company via phone at 1-877-322-8228. A copy of your credit report also can be obtained through the mail. To request a credit report, you must complete a printed form from the company's website and mail it to: Annual Credit Report Request Service, P.O. Box 105281, Atlanta, GA 30348-5281. The credit report does not include a credit score, although the score is based on information in the report. Credit scores usually can be obtained from the credit reporting bureaus and other outlets for a fee or as part of subscription package.
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