The Fair Credit Reporting Act is the law that helps keep credit reporting agencies in line. It’s how you as a consumer know that the information reported about you is fair and as accurate as they can guarantee. This doesn’t eliminate the risk of human error, but it does eliminate the risk of malicious intent to damage a consumer’s credit score.
The act helps ensure that credit reporting agencies use your information in a positive manner. In other words, the agencies cannot use incorrect information in an effort to damage your credit score. The law contains rules on how the agencies can collect your information and what they must do to verify it before releasing it to the public.
What the Fair Credit Reporting Act Covers
Under the Fair Credit Reporting Act, you have certain rights. They include:
- A free copy of your credit report on an annual basis – You must request the report and be able to verify your identity. Within 15 days of your request, the proper agency must provide you with the report.
- Limited access to your report – You don’t have to worry about just anyone looking at your credit report. Only authorized companies can pull your credit and with your authorization. This includes banks, employers, and credit card companies to name a few.
- The right to dispute – If you find incorrect information in your credit profile, you can dispute it in writing to the credit bureau. Upon receipt of the dispute, the agency has 30 days to verify the accuracy of the information. If they cannot find any proof either way, they must delete the information. At the very least, you can add your own statement to the report to show that you dispute it.
- The right to have old information removed – If you have old collection accounts or other negatively reporting accounts, they must be removed after 7 years. If they still remain on your credit report, you can ask that they be removed, with the agency must do by law.
- Protect against soft credit pulls – If you don’t want to receive prescreened credit card offers, you can opt out and credit card companies can no longer access your general information. You must call 888-5-OPTOUT.
- Get a copy of your credit report if you are denied credit – If a company makes a credit decision that doesn’t go in your favor; you are entitled to a copy of the credit report they used to make the decision.
- Prevent credit card theft – The law also requires businesses to use only a few numbers of your credit card on receipts rather than the full number. This deters thieves from getting their hands on your information.
- Put a fraud alert on your credit – If you are a victim of identity theft or any other type of fraud, you can put a fraud alert on your credit file. This ensures that lenders will call you to make sure you applied for the credit whenever someone applies for new credit in your name.
- Employers cannot access your information without your approval – Employers are among those that may see your credit report, but only upon your written approval. Without it, they cannot pull your credit.
In addition to these Fair Credit Reporting Act laws, your state may have more laws that they enforce. This just serves to protect you even further. The idea is to help you avoid any type of fraud and to keep your credit in good standing even if you had a rough time in the past.