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The Importance of the Fair Credit Reporting Act

On Behalf of | Jan 24, 2013 | Consumer Protection

The Fair Credit Reporting Act (“FCRA”) is a federal law that regulates the use of consumer credit and other background information.  The FCRA was created to ensure the distribution of accurate information about each consumer and provide adequate notice and information to consumers whose credit or employment is affected by the information collected and disseminated.  Today, in our strained economy, your credit is more essential than ever to staying adrift and it is important to know your rights under the law.  Plus, with many more companies performing background checks on potential employees, because of the ease of obtaining this information, it is crucial to know what information is out there about you.  It can cost you a job.

As explained in previous posts, credit or consumer reports affect several aspects of your life -from whether you get a mortgage to your job application. Consumers who pay off their debts in full and on time every month generally have good credit scores making it easier to obtain even more credit at low interest rates.  On the contrary, consumers who cannot pay off their debt and continue to make late payments allowing their debt to accumulate, have a difficult time getting credit and suffer increased interest rates.  Low credit scores make it even harder to get on top of your expenses or be approved for additional credit.   Previous posts on this topic include Disputed Accounts Reported on Your Credit and Spring Cleaning Your Credit Report.

Credit Reporting Agencies have been in existence since the early 1900s, reporting information on each consumer.  Since its inception, there have been accompanying issues such as distribution of inaccurate information and dissemination to any party to review a consumer’s private report.  As a result, the FCRA was enacted in the 1970s to protect consumers from dissemination of this private information and to establish rights in an industry that drives your financial well-being.

The FCRA imposes important duties upon credit reporting agencies (“CRAs”) that every consumer should concern themselves with.  Under this law, a CRA must provide consumers with the information contained in their individual file, and take action to verify any information disputed by the consumer.  Negative information can only be reported on a consumer’s file for a set period of time, generally around 7 to 10 years, providing the consumer with an opportunity to have a fresh start.  In the event that negative information is disputed and subsequently removed from the consumer’s credit report, a CRA must inform the consumer in writing within five days before re-reporting the information.  Furthermore, recent amendments to the FCRA allows consumers to obtain one free copy of their credit report a year from in order to ensure the information being reported is accurate and to allow consumers the opportunity to dispute any inaccuracies.

If you feel your rights have been violated under the FCRA you have a right to file suit under the Act and may be entitled to damages as a result.  Contact SmithMarco P.C. for a free consultation.