Retail Credit, the first significant United States credit reporting agency, opened for business in 1899 in Atlanta, Georgia. Retail Credit would later change its name to Equifax and become a major player in the credit reporting industry, but began by developing "credit books" that supplied credit information to local grocery stores. As the company grew, so did its reach. By the mid-1960s, 300 branch offices, 1,400 sub-offices and 7,400 employees were monitoring people's personal credit.
History
Federal law did not always require fair credit reporting. Prior to 1970, few laws existed to protect consumers. Agencies could collect, use and pass on both personal and credit information without consumers' knowledge or consent. Consumers also had no legal right to see the information contained in your personal credit file. The Fair Credit Reporting Act of 1970 followed a Congressional inquiry exposing widespread abuse within the industry. Inclusion of outdated, incorrect and fabricated information and "spying" practices that resulted in the inclusion of information, such as marital status, sexual orientation and even drinking habits was common practice among credit investigators.
The Facts
Missouri Representative Leonor Sullivan and Wisconsin Senator William Proxmire created the Fair Credit Reporting Act. This law, passed in 1970 and enacted on April 25, 1971, represents the first time credit agencies saw regulations, restrictions and consequences for noncompliance regarding fair credit reporting. The Congressional Findings and Statement of Purpose, section 602 item A of the FCRA, speaks of "elaborate" credit reporting methods developed by consumer reporting agencies and imposes on them the responsibility of treating you in a fair and impartial manner while maintaining your right to privacy.
Features
Fair credit reporting requires anyone furnishing information to a credit reporting agency, such as a lender or credit card company to provide accurate information, investigate disputes you initiate and inform you of negative information placed in your report within 30 days of doing so. Credit agencies, such as Experian, Equifax and TransUnion, compile information into a credit report that can only contain information allowed by law. This information consists of basic identification information, financial information, public records information, credit accounts and their status, collection items, employment history, identity reporting for anyone who requests your credit file, narrative information you add when disputing a credit entry, and health information. In most cases, you must provide explicit consent for anyone to view your credit file. A court order or a request by certain government agencies that deal with terrorism or counterintelligence are exceptions to this rule.
Evolution
Frequent changes to fair credit reporting requirements increase consumer protections. One of the most important is free access to your credit report from each of the three major reporting agencies on an annual basis. Other changes include provisions to opt-out of "prescreening" and prevent credit agencies from selling your name to companies based on information in your credit file, and the right to initiate a dispute with the company or agency that furnished information to the credit agency rather than trying to correct information by going through the credit agency.
Considerations
While fair credit reporting requirements and strict penalties for noncompliance increase consumer protection, you must remain vigilant. Agencies cannot report negative credit information after seven years and bankruptcy information after 10 years. They must remove or correct inaccurate or incomplete information, or information they cannot verify. Fair credit reporting laws give you the right to complain to government agencies and if necessary, take legal action against a credit agency or anyone providing false information or failing to take action to remove or correct the information.
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