Understanding the Fair Credit Reporting Act

As a home owner or buyer, it’s important for you to understand what the Fair Credit Reporting Act is and how it protects you as a consumer. In doing so, you will know your rights and how to respond to unfair or inaccurate consumer reporting.

What is the Fair Credit Reporting Act?

The Fair Credit Reporting Act (FCRA) was passed in 1970 and was the first law to require accurate and fair consumer reporting in the U.S. The FCRA protects individuals and their credit by requiring consumer reporting agencies to follow certain guidelines. It also regulates the way companies like Equifax, TransUnion and Experian use information related to your credit.

The FCRA also limits who has access to your personal information. Each state is in charge of enforcing the FCRA and many have their own consumer reporting laws. In some cases, the consumer may have more rights under state law.

What Are Your Rights Under the FCRA?

The Fair Credit Reporting Act provides consumers with the right to:

• Access to their credit report: Credit reporting agencies are required to provide you with any information in your credit file as long as you have proper identification.
• Protected access: A consumer reporting agency may only provide information to people with a valid need like creditors or landlords. Employers can only see your credit information if you give them permission.
• Dispute incomplete or inaccurate information: Consumer reporting agencies must review any information that is disputed on a report in a timely manner.
• Have outdated information removed: In many cases, agencies cannot report any negative information that is over seven years old on your report or report bankruptcies more than 10 years old.
• Maintain medical information privacy: Creditors are not allowed to obtain your medical information in order to make a credit decision.
• Limited unsolicited credit offers: Any “prescreened” credit or insurance offers must have a toll free number for consumers to opt out of their contact lists.  
• Receive notification of possible negative information: If negative information is submitted to a credit reporting agency, you have the right to be notified.
• Seek damages: You may be able to sue an agency in state or federal court if that reporting agency violates the Fair Credit Reporting Act.
• Know when your credit report is used against you: If your credit report is used to deny an application for employment, credit or insurance, the denier must tell you why and give you the credit reporting agency’s contact information.
• Ask for your credit score: You can request your credit score from consumer reporting agencies but you will have to pay a fee. Some Kansas City mortgage companies will provide their clients with a credit report when they apply for a loan. This cost may be covered by the lender or rolled in the cost of obtaining the home loan.

Next Up: The Equal Credit Opportunity Act vs. the Federal Fair Housing Act

The above information is for educational purposes only. All information, loan programs and interest rates are subject to change without notice. All loans subject to underwriter approval. Terms and conditions apply. Always consult an accountant or tax advisor for full eligibility requirements on tax deduction.