The FCRA or the Federal Credit Reporting Act is a federal law that governs the collection and dissemination of consumer credit information. It promotes the accuracy, fairness and discretion of the personal credit information that is compiled by credit reporting agencies. It was initially enacted back in 1970 and the latest amendment took place in December 2003.
Credit reports are widespread and often used in the United States. The original objective of a credit report was to appraise the creditworthiness of an individual for acquiring credit but nowadays credit reports are also used for such things as insurance underwriting and employment applications. As of this time, it is completely legal for an individual to be denied insurance or turned down for or terminated employment on the basis of what is contained in a credit report.
A credit-reporting agency is a business that collects, compiles and sells credit information on consumers. In the United States there are three main credit-reporting bureaus, TransUnion, Experian and Equifax.
The Federal Credit Reporting Act protects consumers from undue, incomplete and incorrect reporting on a credit report. Under this law a consumer has the right to dispute and challenge any information on a credit report that is incorrect, incomplete or erroneous in any way. As a consumer you have the choice to present a dispute to the credit bureaus. After receipt of your dispute letter they will have 30 days in which to either validate the accuracy of their coverage or to remove it from your account.
Under the FCRA, a consumer is as well allowed to obtain one free credit report from each of the credit bureaus one time per year. In order to collect your credit report you just need to submit a request. If you are turned down for credit because of something that is listed on your credit report you also have a right at that time to obtain a credit report. The credit bureau that is reporting the negative information must supply a credit report to the consumer.
Frequently negative credit listings are deleted from credit reports after a dispute because the credit bureaus were unable to validate the truth within the time period. If information is removed the credit bureaus can’t reinstate the listing without notifying the consumer in writing.
The Federal Credit Reporting Act in addition clearly outlines the period of time that poor information can be retained on a credit report. Most often all listings can only stay on the credit report for 7 years from the point of delinquency. A bankruptcy can stay on the report for 10 years and a tax lien can remain for 7 years once it is paid off.
It is well worth a consumers time to take advantage of the rights provided by the Federal Credit Reporting Act because it is predicted that as many as 40% of all disputed information is not accurately validated within the time limit. Consumers should be conscious, though, that all accurate and truthful information should not be disputed but should remain on the credit report.
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