Fair Credit Reporting Act (FCRA) – Repairing Your Credit
What is the Fair Credit Reporting Act?Established in 1970, the Fair Credit Reporting Act (FCRA) restricts businesses from freely accessing an individual’s personal credit information by contacting one or more of the big three credit bureaus: Experian, TransUnion and Equifax. Under the Fair Credit Reporting Act, a company must have “permissible purpose” before requesting information from a credit bureau. In other words, a business cannot access someone’s credit record unless the query achieves a lending decision. Intended to protect individual privacy, the FCRA makes it illegal for anyone who is not involved in a lending situation with a potential client to contact a credit agency and request information about that person’s credit history. For example, insurance agencies and employers must get permission from the individual they are interacting with before contacting Experian, Equifax or TransUnion to request copies of that person’s credit score.
How the FCRA Helps Ensure Credit RepairWhen the FCRA was passed in 1970, it not only supported privacy rights of consumers but also enacted rules by which all credit bureaus must abide. These include:
- Removing all data that is obsolete within a pre-set time period (debt type dictates the time period; for example bankruptcies remain on a person’s credit report for seven to 10 years).
- Removing the majority of closed accounts within seven years regardless of debt type.
- Giving consumers the legal ability to dispute errors on their credit score as reported by one or more credit agencies. When confronted with possible errors by a consumer, the credit agency must investigate the issue fully until it has been resolved with supporting documentation.
- Entitling consumers to legal recourse if they discover someone has deliberately provided erroneous information to a credit bureau regarding their credit score. In fact, consumers can sue the company or individual who gave false information to a credit agency for up to $1,000 per infraction.
- Granting consumers the right to sue anyone who accesses copies of their credit score (FICO) by falsely representing themselves and their intent.