What is the Fair Credit Reporting Act?  DataCheck - Home

What is the Fair Credit Reporting Act?

As consumer reporting agencies share more and more credit-related information with other credit bureaus and third-party inquisitors, the privacy of the individual must be protected. In order for this to happen, the Fair Credit Reporting Act was established. In October of 1990, the Fair Credit Reporting Act (FCRA) was enacted in order to keep the power of the credit reporting system in check. Why? Simply because credit bureaus were aiming to nationalize the credit sharing system. This could easily risk the privacy of individual information. Under the Fair Credit Reporting Act, individual rights are protected from falling into the wrong hands. The rights are as follows:

Notification – When a business inquires after a person's credit score, said business may use said information to deny the person a sale, loan, mortgage, employment, or other transaction. When a person is denied based on credit score information, he or she must be notified of the rejection. This protection falls under the Fair Credit Reporting Act clause stating that a person must be told if the information in his or her file has been used against him or her. Put simply, if ever denied employment, financial support, or a sale because of information found on a credit report, said individual must be notified. The individual has the right to know the name, address, and phone number of the company that denied them.

What is filed – Under the Fair Credit Reporting Act, all persons have the right to know what information is on his or her file. Although there are many companies that will supply your credit information for a price, you have the right to annually access your information free of charge. To do this, you can contact one of the three largest credit bureaus, Experian, Equifax, or TransUnion, and request a copy of your report. An easy way to do this is through AnnualCreditReport.com.

Dispute – The Fair Credit Reporting Act defends the individual's right to dispute information on his or her credit report. This is why it is so important for an individual to check his or her file once a year. If false information is discovered, the person can request that the data be investigated. It takes roughly 30 days for a credit bureau to investigate a dispute; however, most of the time, large credit bureau companies do not effectively investigate said claims. This could leave false information lagging on a report long after the individual opened a dispute. If the dispute is taking an exceptionally long time to be investigated, the individual has the right to seek legal action.

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