The Fair Credit Reporting Act Guarantees You Basic Rights and Protections for Your Credit
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The Fair Credit Reporting Act Guarantees You Basic Rights and Protections for Your Credit

The fair credit reporting act is an important law that grants several key rights and protections to American consumers to protect their credit files

April 18, 2021

You might already know that you have a right to a free annual credit report from each of the three major credit reporting bureaus. But a federal law, the Fair Credit Reporting Act, gives you additional legal rights and protections. It protects you from the willful or negligent inclusion of inaccurate information in your credit report that can cause you to be denied credit or favorable credit terms.

Free Credit Reports

The Fair Credit Reporting Act gives you the right to one free annual credit report from Experian, TransUnion, and Equifax for any reason. You are also entitled to a free credit report in the following situations:

  • Your identity has been stolen and you have placed a fraud alert on your credit file.
  • Information on your credit report has led someone to take adverse action against you, such as denying you credit or a job.
  • You are currently unemployed but are planning to apply for work at some point within the next sixty (60) days.
  • You receive public assistance.

Right to credit score

Credit scores are numerical summaries of your credit-worthiness based on information from credit bureaus. You may request a credit score from consumer reporting agencies that create scores or distribute scores used in residential real property loans, but you will have to pay for it. In some mortgage transactions, you will receive credit score information for free from the mortgage lender.

duty to advise you if information is used against you

The Fair Credit Reporting Act requires that anyone who uses a credit report or another type of consumer report must inform you if the information was used to deny your application for credit, insurance, or employment or to take another adverse action against you. You must also be provided with the name, address and phone number of the credit reporting agency that provided the information.

Disputing Items

Under the Fair Credit Reporting Act, you have the right to dispute inaccurate and erroneous information on your credit reports. When a credit reporting bureau receives your dispute, it has thirty (30) days, or 45 (forty-five) days in certain circumstances, to investigate the dispute unless the dispute is frivolous.

Result of dispute

Once the credit reporting agency completes its investigation into your dispute, it must remove or correct any inaccurate, incomplete, or unverifiable information. Verified information may continue to appear on your credit report. If the item cannot be verified within the time limit, the credit reporting agency must temporarily remove the item until the investigation is completed. Further, the agency has to tell you the results of the investigation regardless of the outcome.

old negative information

Consumer reporting agencies may not report outdated negative information. In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.

Security Freezes

You have a right to place a "security freeze" on your credit report, which will prohibit a consumer reporting agency from releasing information in your credit report without your express authorization. The security freeze is designed to prevent credit, loans, and services from being approved in your name without your consent. However, you should be aware that using a security freeze to take control over who gets access to the personal and financial information in your credit report may delay, interfere with, or prohibit the timely approval of any subsequent request or application you make regarding a new loan, credit, mortgage, or any other account involving the extension of credit.

Fraud Alerts

As an alternative to a security freeze, you have the right to place an initial or extended fraud alert on your credit file at no cost. An initial fraud alert lasts for one year. Upon seeing a fraud alert display on a consumer's credit file, a business is required to take steps to verify the consumer's identity before extending new credit. If you are a victim of identity theft, you are entitled to an extended fraud alert, which is a fraud alert lasting seven years.

Protecting Your Credit Card Numbers

The Fair Credit Reporting Act requires that credit card receipts only list shortened account numbers to prevent the information from being stolen. This is why a portion of your account number are replaced by other characters on the receipt, such as asterisks.

Who Can Access Your Credit Reports

The Fair Credit Reporting Act determines who is allowed to access your credit reports. Access can be granted to other parties under these circumstances:

  • You are allowed to access your own reports as often as you want, though you may be charged a fee if you have already requested your free report for the current year or otherwise don't qualify for an exception.
  • Your reports may be accessed by third parties if you apply for a loan, credit card, insurance policy, or other type of item for which your credit history is used as a factor.
  • Your report may be accessed if a court order has been issued.
  • Employers can request your credit reports as part of their screening process, but only if you provide written consent.
  • If you have an account with a creditor, the account provider can access your reports as part of the process of managing your account.

Opt Out of pre-approved offers

The Fair Credit Reporting Act allows you to opt of our receiving pre-approved credit card offers in the mail. If you don't want to receive these offers, you can opt-out on the Opt Out Prescreen Website. It's completely free.

Damages if your rights are violated

If your rights under the Fair Credit Reporting Act are violated, you may be entitled to collect:

  • Actual or statutory damages;
  • Attorney's fees;
  • Court costs; and/or
  • Punitive damages if the violation was willful.