The federal Fair Credit Reporting Act (FCRA), enacted in 1971, was prepared by Federal Trade Commission, the agency that currently enforces it. The purpose of the FCRA is to ensure accuracy in a consumer's credit report, provide the consumer a way to access his reports and protect the consumer's privacy.
Access to Information
Under the FCRA, a credit reporting agency such as Experian, Equifax or TransUnion, must inform the consumer of everything contained in his credit report, including medical information. The agency must inform a consumer who has requested his credit report within the past year, or two years if the request is related to employment. The FCRA entitles everyone to one free credit report yearly. The law also entitles a consumer to a free credit report if adverse action is taken against him (if he is denied a loan or employment based on information in his credit report) and the request is made within 60 days. Other instances in which a free credit report may be issued is if the consumer is on welfare, his credit report reflects errors due to identity theft or he isn't employed and plans to find a job in the next 60 days. Otherwise, credit reports may only be provided to parties other than the consumer for legitimate business reasons only.
Right to Dispute
The FCRA gives the consumer the right to dispute inaccuracies in her credit report. The consumer must inform the agency (preferably in writing) as to which information is inaccurate, and the agency must investigate the error (usually within 30 days) unless the dispute is frivolous. The agency must also forward information regarding the dispute to the reporting creditor. The agency must remove erroneous information if necessary and inform the consumer of its findings in writing. Consumers who are not happy with the results of an agency's investigation are permitted to submit to the agency a statement of 100 words or less to include in their credit report.
Right to Accuracy
The FCRA prohibits any consumer reporting agency from removing accurate negative information from a consumer's credit history before the record expires. Negative information is reflected for seven years except in the case of bankruptcy, which remains in the consumer's credit report for 10 years. The FCRA imposes no time limitations on criminal convictions or if information is reported regarding a job application for a salaried position of more than $75,000 or when an application for more than $150,000 of credit or life insurance is made. Unpaid civil judgments and information about lawsuits are reflected in the consumer's credit history for seven years or until the statute of limitations expires, whichever duration is longer.
Other Rights
The FCRA restricts creditors and insurers who use information contained in a consumer's credit file to send prescreened offers. By law, these offers must contain a toll-free number that the consumer can call to opt out of receiving such offers in the future. Finally, the consumer is allowed to file suit against a credit reporting agency in state or federal court should it violate the any provision of the FCRA and collect damages and attorney's fees as awarded by the court if the consumer prevails.
FTC Enforcement Actions
The FTC files a complaint when it has reason to believe that the FCRA or any other consumer law is being or has been violated and a legal proceeding is in the best interest of public policy.
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