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Understanding the Fair Credit Reporting Act (FCRA)

If you’ve ever wondered about what laws credit reporting agencies have to follow, you’ll be glad to know that there are indeed regulations that govern their behavior. The most important of these are outlined in the Fair Credit Reporting Act (FCRA), which is a federal Act.

An Overview of the FCRA

The Fair Credit Reporting Act (FCRA) was originally enacted in 1970 and continues to set legal standards for credit reporting today. It regulates the types of data that credit bureaus can collect. This information isn’t limited to bill payment history and current debts but also includes a person’s current employment information, current and past addresses, bankruptcy and judgment information, whether or not the person owes child support, and more.

Who Can See Your Credit Report and When?

The FCRA limits who can see your credit report and when they can look. The most obvious time is when you ask for credit. Credit card companies, mortgage lenders, and other potential creditors will pull your report to determine whether to lend to you and decide on what terms to offer you.

Sometimes, you may be surprised at who can pull your report. For example, potential landlords can see your report and refuse to rent to you based on its information. Potential employers may also ask your permission to see this record. The government can see it when they have a grand jury subpoena, if you apply for certain licenses, or if it needs to decide whether you can have certain security clearances.

Anyone asking to see someone else’s credit report must state the reason for the request. In some cases, you must also give permission for a company to look.

Pre-Screened Offers

Various companies send offers based on a limited look at your credit information. These companies see only part of your credit report and don’t need your permission to do so. However, the FCRA makes it so you can opt out of these offers.

Your Rights Under the Fair Credit Reporting Act

The FCRA gives consumers numerous rights revolving around their credit reports. As a consumer, you can see your reports from each major credit bureau for free once every 12 months. You can even use a government website to request your information: AnnualCreditReport.com. Unlike most government websites, it uses .com instead of .gov, possibly to make it easier to remember.

Other rights granted by the FCRA include the ability to dispute items in your report and have them corrected, verify the accuracy of your reports when they are needed for employment, and get notified if your file has resulted in a negative effect when you have applied for credit or attempted other transactions. The Act also stipulates how long negative records can remain in your credit reports.

What Happens if a Credit Reporting Agency Violates the FCRA?

Each violation may result in a fine between $100 and $1,000. If the violation has caused damages, the violator may also be sued. This can result in them paying actual and punitive damages and attorney fees.

If someone willingly and knowingly gets a credit report under false pretenses, that person may face criminal charges.

Who Enforces the FCRA?

The Federal Trade Commission and the Consumer Financial Protection Bureau both have enforcement responsibilities for the FCRA.

Does the FCRA Make a Difference in Consumers’ Lives?

In most cases, the effects of this law won’t be prominently noticed, but the Act makes a huge difference in the lives of average Americans. It makes it harder for criminals to commit identity theft and stops people from being able to pry into others’ personal business for spurious reasons. It also allows people to recover more easily from periods of financial hard times thanks to its requirement that negative reports age off of reports after a reasonable period, usually between 7-10 years (depending on the nature of the negative line items).

The FCRA has done much to protect consumers, but it isn’t bulletproof. Sometimes, a collection agency or other creditor will re-report disputed items, give the reporting agencies erroneous data, or otherwise do things that violate this or related laws. Reporting agencies may also be obstinate and uncooperative about not removing disputed items.

In these cases, you may have to sue and get a court order mandating removing the erroneous information. The upside is that you can sue for damages simultaneously, and a positive judgment can be substantial.

If a violation of the FCRA has harmed you, call us here at the Schwartz Law Firm today. We’ll set up a consultation to decide your best course of action for getting a fair outcome.

Matthew Schwartz

Matthew Schwartz is a Shareholder at Schwartz, P.A. where he serves as the practice group leader for their securities litigation and professional negligence practice group. His practice is focused on plaintiff-side securities arbitration and litigation, representing individual investors and institutions in claims against brokerage firms, investment advisors, commodities firms, hedge funds and others. He also represents plaintiffs who have been damaged by their insurance agents, lawyers, accountants and other professionals. He is an accomplished commercial litigator who has handled a variety of business disputes and other consumer claims.

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