What Is the FCRA and Does it Protect Me?

The FCRA, or Fair Credit Reporting Act, is the Federal law that, among other things, controls the access to our credit reports.  The law was originally enacted in October of 1970 and has since been amended at least 19 times.  And while the law is over 80 pages long, there are some highlights that we need to understand.

1.  Consumers have the right to a free credit report – The FACTA amendment (Fair and Accurate Credit Transactions Act of 2003) to the FCRA is what gave us access to our credit reports via www.annualcreditreport.com.  We can claim one free credit report from each credit bureau once every twelve months.

2.  Credit reports can only be accessed under certain conditions – This section of the law is called Permissible Purpose and it defines when our reports can be shared.  For example, collectors can pull our reports.  Insurance companies and employers can pull them as well.  We can pull them, of course.  And, lenders can also pull them.  There are several other examples but these are the most common cases.

3.  Consumer explanations can be added – The law allows consumers to add a short statement to their credit reports and give their side of the story regarding the information on their file.  This is called a Consumer Statement and it can be 100 words long for residents of most states.  So, if you want to give a brief explanation why you filed bankruptcy then you are allowed to do so.

4.  Negative information can only stay on file for so long – Most negative information can only stay on your credit reports for 7 years, according to the FCRA.  There are some exceptions to that rule.  Chapter 7 bankruptcies can stay on file for 10 years from the filing date.  And, unpaid tax liens can stay on indefinitely.

5.  You have the right to challenge information – The FCRA gives us the right to challenge information we don’t agree with.  If you contact the credit bureaus with a dispute they must investigate the data by contacting the source of the information.  They have 30 days, in most cases, to complete their investigation.  If they determine that the information was incorrect then they must either remove it or amend it accordingly.  If they determine that the information was correct then they can leave it as reported.

John Ulzheimer is the President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling.  He is an expert on credit reporting, credit scoring and identity theft. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry.

Categorised in: Credit Report, Credit Score

This post was written by John Ulzheimer