In 1970 Congress enacted a federal law to defend consumers from inaccuracies on their credit reports. This law is identified as the Fair Credit Reporting Act or the FCRA and it was passed to protect consumers and encourage the fairness, accuracy and privacy of personal information compiled by credit reporting agencies on credit reports.
The main credit reporting agencies are TransUnion, Equaifax and Experian. They are in the industry of collecting and compiling information used for credit evaluation and other purposes.
A consumer now has the right to argue and challenge any information found on a credit report on the basis of completeness and truthfulness. After a dispute is received the credit bureaus have 30 to 45 days to corroborate the correctness and the ownership of the disputed credit. If they are not capable to supply that confirmation within the time frame then the negative listing must be deleted from the report.
The credit reporting agencies also have other responsibilities under the FCRA. Each year a free credit report must be provided to any consumer who desires one. Before 2003 the consumer had to give a fee for this report but an amendment in 2003 altered this and now it is provided at no charge. A report must also be provided if the consumer has been denied credit on the basis of what is provided in the report.
Oftentimes when a negative mark is disputed it is removed from the account. Under the FCRA the disputed information cannot be reinstated without the credit bureau contacting the consumer in writing.
Because of the FCRA there is also now a limit as to how long the harmful information can stay on a report. Most often it is 7 years from the time of a delinquency but the exclusion is a bankruptcy, which can stay put for 10 years and a tax lien that can stay put for 7 years from the time of payoff.
The credit reporting agencies receive many disputes and it has been estimated that as many as 40% of disputed information is not verified within the time limit and must be removed from the report. Consumers can use that fact for their advantage however; true and accurate information should always remain on the report even if it is unhelpful.
A FCRA gave consumers the right to argue inaccuracies and errors and to do the work to repair their credit. Credit repair takes time and patience but it can be accomplished by doing it yourself or by hiring a professional company that specializes in credit repair.