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Understanding The Fair Credit Reporting Act

The Fair Credit Reporting Act (FCRA) is a federal law that regulates consumer credit information collected by credit agencies, as well as consumers' access to credit reports. The Act is designed to ensure the privacy, accuracy, and fairness of information maintained in credit reporting agency files.

What Is The FCRA?

The FCRA was passed in 1970 to regulate banking recordkeeping as well as to require those institutions to report certain transactions to the Department of Treasury. Over time, the Act has been amended to address growing concerns regarding consumer credit information and its handling by credit reporting agencies (CRAs).

How Does The FCRA Work?

The FCRA lays out the rights of the consumer and the responsibilities of CRAs regarding consumer credit information. The Federal Trade Commission, a government organization, is tasked with enforcing consumer protection laws, including the FCRA. The Federal Trade Commission assures that the provisions of the FCRA are followed and strongly enforced.

The FCRA protects consumer credit information by regulating the collection and reporting of credit information. This includes how the information is collected, how long the information is kept, how that information is shared, and what happens when the rules protecting consumer credit information are violated.

Who Does The FCRA Apply To?

The main purpose of the Act is to protect consumers by focusing on credit reporting practices regarding consumer credit information. Under the FCRA, a credit reporting agency is anyone who collects, stores, or shares consumer credit information to create consumer reports. These agencies generally include the three main credit reporting bureaus—Experian, Equifax, and TransUnion—as well as other specialized companies that collect and sell consumer credit information.

What Kind Of Information Can Credit Reporting Agencies Collect?

The information CRAs may collect includes individual bill payment history, past loans, and current debts owed. In addition, credit reports may include an individual consumer’s employment information, past and present addresses, bankruptcy and child support information, and criminal history.

Who Can Access Credit File Information?

The FCRA limits access to consumer credit information to the consumer and those who have a valid need for the information. Those seeking access to consumer credit information will have to obtain consent from the individual consumer and specify why they are requesting the information. Generally, parties in a transaction—such as a lender in a loan application—will be allowed to access consumer credit information. Other examples of permitted access include parties in applications for loans or mortgages, insurance policies, residential housing, and employment.

How Long Can Negative Credit Information Remain In A Credit File?

Negative credit information might include delinquent payments, credit inquiries, or bankruptcies. Negative credit information helps lenders and others to make informed decisions regarding transactions with consumers. However, negative information may only be included on a credit report for a certain amount of time. For example, negative information, like past payment delinquencies, may only remain on a credit report for up to seven years. Most negative credit information will be removed within seven years, but some kinds of information, like bankruptcies, can remain for up to 10 years.

What Are Your Rights Under The FCRA?

All consumers are entitled to a free credit report once every 12 months from the major CRAs at Due to COVID-19 hardship, consumers are entitled to a free weekly credit report through April 20, 2022. Customers may still obtain a report from the major CRAs after that date; however, the reports will not be free. Other consumer rights under the FCRA include:

  • Knowing what information is in their credit agency files
  • Obtaining a credit Score
  • Knowing if credit file information has been used against them
  • Disputing incorrect or incomplete information in a credit report
  • Limiting unsolicited offers based on information in your credit report
  • Requesting a jury trial for FCRA violations

What Happens When Someone Violates The FCRA?

A violation of the FCRA can carry a fine from $100 to $1000. If a consumer incurs damages resulting from the FCRA violation, they may be granted actual damages for loss suffered from the violation, punitive damages if the violation is especially reckless or malicious, and attorney’s fees. In circumstances where consumer credit information is knowingly and willfully obtained under false pretenses, the violator may be subject to criminal charges.

How Do You Recover Damages If Your FCRA Rights Are Violated?

If violations of the FCRA have been committed, it may be necessary to go to court. In these circumstances, it is important that the consumer retains an FCRA lawyer to represent them. These proceedings may be difficult and confusing, and an experienced attorney will help achieve the best result. Law Office of Simon Goldenberg is focused on protecting consumers' rights. We are dedicated to helping you seek the remedies that you deserve. For a consultation, call (888) 301-0584 or contact us online today.