Fair Credit Reporting Act: How to Protect Your Credit

The Fair Credit Reporting Act is a federal law written to provide consumers with recourse in the event that their credit reports contain inaccurate or out-of-date information that impacts the consumer’s life. The FCRA is a federal law which means it protects all citizens. Most states have consumer fraud laws; your state of residence probably has a set of consumer protection laws. Many people may have heard of the FCRA but are unclear about what it does and how they can use it if they have a problem with their credit reports. If you want to apply for credit, a job, an apartment, or a home loan, then this article is worth reading because you have certain rights to protect your credit history under the FCRA. Read on to find out more about the Fair Credit Reporting Act from an experienced civil litigation and dispute resolution attorney.  

What is the Fair Credit Reporting Act?  

The Fair Credit Reporting Act, or FCRA, can be found at 15 U.S.C. 1681. The Fair Credit Reporting Act is a federal law that governs the accuracy of any information put on your credit report by credit reporting agencies. This law is essential for consumers who apply for things that require a good credit rating because it imposes liability for inaccurate information.  

The “Big Three”  

To understand what the FCRA does, you need to know about “the big three.” The big three are the major credit reporting agencies out there. Experian, TransUnion, and Equifax are the big three credit reporting agencies, although there are smaller and more specialized agencies as well. For this article, we will stay focused on the big three since that is what most people check most of the time.  

Each of the big three provides credit scores based on information about a consumer’s credit history and current activity. Many people do not check their credit reports regularly to ensure that the information contained within a report from any of the big three is accurate. While a credit score can vary slightly between the big three, it is usually within a small range so that no matter what credit report is checked, the score is in the same range of excellent, very good, fair, etc.  

It is the legal responsibility of the big three to provide information about consumer credit that is accurate, fair, and up-to-date. If one of the big three is reporting information that is not accurate, the score will drop, and the consumer will suffer when they apply for credit. The FCRA is the legal means that ensures that a consumer has recourse if one or more of the big three is inaccurate in what it reports about the consumer’s credit history.  

What Does The Fair Credit Reporting Act Do?  

The FCRA does just what its name says it does; it ensures fair credit reporting. If a consumer looks at one or more of their credit reports and finds inaccurate or old information, they can require the credit agency to fix it in writing.  

Your rights under the FCRA:  

So you have applied for credit or a loan or even sometimes a job, and you got turned down because of your credit. You do have rights under the FCRA to request the following:  

• If you were the recipient of what is referred to in the FCRA as “adverse action,” you have the right to request and receive a copy of whatever credit report was used in making the decision that resulted in the adverse action. For example, if you apply for an apartment and the potential landlord turns down your application based on your credit history, they are required by law to provide you with a copy of the credit history they used to make their decision. It may be that the information the potential landlord was provided with was incorrect, in which case you can take further action under the FCRA. On the other hand, if the information the landlord was provided with is accurate, there is no basis for any legal action on your part.  

• You requested that inaccurate or incomplete information be removed from your credit history. If you obtain a copy of your credit history for one or all of the big three and find information is wrong or unverified, you have the right to demand that the credit reporting agency or agencies correct or remove the information. It is incredible what can be incorrect on your credit report, so regular checks on it are vital. While some people use free services like Credit Karma to keep an eye on their credit score, getting regular copies of your credit report is the only way to check on EVERYTHING. For all you know, there could be an address listed that you never lived at or a debt you paid off that is still reported as delinquent. The only way to be sure is to look at your actual credit report, not a credit monitoring application or website. While there are laws to protect you if the information is wrong, you have to take the first step and get copies of your credit report to look at and make sure it is correct in the first place.  

• If you dispute any of the information contained in any of your credit reports, you need to do it in writing and have a record of the cred reporting agency receiving the letter. After the agency gets the letter, they have 30 days to correct or remove the information. You should be aware that if the credit agency is able to verify the information, it will not be removed.  

• You are allowed to ask for one free copy of each of your credit reports every twelve months. An excellent site to use is AnnualCreditReport.com, which is the easiest method to use. You can get a copy of your credit report at any time if you pay for it. A lot of people who are planning to apply for a home loan usually start the process by getting their credit reports and making sure that they have a good score and that all the information contained on the credit report is correct and up to date.  

• You have the right to up-to-date information. The credit reporting agencies are responsible under the FCRA for removing old or outdated information from your credit report. Most old information should fall off after seven years. If you have ever filed for bankruptcy, that will remain on the report for ten years but should be removed after that time period has elapsed.  

• You have the right to place your credit information on a security freeze. If you suspect identity theft, you can contact the reporting agencies and require them to freeze any reporting. For example, if you suspect that someone has your personal information and is using it to apply for credit, you can require a freeze. With the freeze in place, the credit reporting agency will not release information about your credit without your express permission. The downside to the freeze is that it will slow down any request you personally make for credit.  

• You have the right to control any access to your credit report by your employer. An employer cannot ask for your credit information without your written consent. In an odd twist, if you are working in the trucking industry, your written consent is not necessary for an employer to access your credit report.  

• You have the right to opt-out of prescreened offers. We have all gotten a slew of offers to apply for credit cards and personal loans. If you are sick of all the junk mail (and sometimes temptation), then you can call the number listed on the offer and opt out of receiving the prescreened offers.  

So What Happens If There is A Violation?  

Now that you have a better idea of what your rights under the fair credit reporting act are, what can you do if there is a violation? We have already talked about the need for you to be proactive and keep an eye on your reports. We have also discussed the process for disputing the information. What if you have done all those things, and the credit reporting agency is still not fixing the issue?  

The first thing to do is to reach out to an experienced consumer protection attorney. An attorney with a consumer protection practice will be able to evaluate your situation and clearly identify if there is an actionable violation of the fair credit reporting act. This is important because the credit agencies will most likely try to get your lawsuit kicked out of court instead of dealing with it, known as a motion to dismiss. The strength of your case will determine whether or not you should move forward.  

Since the FCRA is a federal law, you have a federal cause of action and will sue in federal court. Many states also have state consumer protection laws that will also come into play, but your attorney will be able to tell you more about what your state offers for consumer protection.  

When you sue under the fair credit reporting act, you will be able to ask the court to award you damages in the form of monetary compensation. The amount of damages will be reliant on what the violation was, so again, you should get an experienced consumer protection attorney to assist with your case.  

Violations of the fair credit reporting act are actually widespread. Credit reporting agencies have a hard time keeping up with all the information they receive every month. Furthermore, disputes tend to fall by the wayside because of human error or a simple failure to act by the agency. As we discussed above, keeping an eye on your credit reports and sending prompt written disputes with evidence of receipt is your first best step in dealing with a violation of the fair credit reporting act. Knowing your rights and acting on them will only work out well for you. If you are a consumer who is concerned about being the victim of a violation of the fair credit reporting act and need advice, feel free to give O’Flaherty Law a call, we would be happy to help you.  

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