Explanation of the Fair Credit Reporting Act

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This legislation guarantees several important protections for consumers.


the main points

  • The FCRA guarantees US consumers some very important rights when it comes to the way their credit data is used, reported, and preserved.
  • For example, the FCRA gives you the ability to freeze your credit to protect your privacy, and to object to any inaccurate information on your credit report.

The Fair Credit Reporting Act, or FCRA, is a federal law passed in 1970 that regulates many aspects of the credit reporting industry. As the name suggests, the FCRA aims to ensure the fairness of information recorded in consumer credit files with major credit bureaus.

In this article, we’ll go through the most important right guaranteed by the FCRA and what it can mean for you.

Important things to know about FCRA

There are many rights guaranteed under the FCRA that are very important to US consumers. The following are the most important protections guaranteed by law.

The right to know how your credit is used

If the information in your credit file is used against you, the FCRA gives you the right to know. This is true if you are denied credit, as well as for other things like employment, based on your credit report. If you’ve ever been refused a loan or credit card and received a letter in the mail a few days later detailing the reasons why, you can thank the FCRA.

The right to privacy in your credit profile

Only people or companies with an authorized purpose can check your balance. In other words, creditors can check your file, because they have a legitimate reason for needing to take a look. Employers can also in some states, if you give written permission. But this part of the FCRA prevents anyone from seeing your credit profile.

The right to refuse access to your credit file

On a similar note to the previous point, FCRA allows you to freeze a file credit report. This prevents any potential lenders from checking your credit file Absolutely Unless you choose to temporarily unfreeze. Not only can this help you protect your privacy whenever you choose to use it, but it can also be a valuable tool if you think your identity has been compromised.

Right not to pre-screen for credit

You can choose to opt out of pre-screened credit offers. If you receive too many mails offering you personal loans, credit cardsmortgages, etc., the FCRA gives you the right to put an end to that.

The right to see your credit file

You have the right to view your credit reports from all three major credit bureaus (Equifax, Experian and TransUnion) for free. Currently, you can view a file Free weekly credit report at AnnualCreditReport.com; In the past, this was limited to once a year. There are services that will make you believe that the only way to see your complete credit report from all three offices is to pay for it, but that is simply not the case.

It is important to note that you do not have the right to see your balance result Free. Credit scores (such as FICO) are maintained by independent companies, not credit reporting agencies.

The right to an accurate credit profile

You have the right to object to information in your credit file if you believe it is inaccurate or outdated. For example, most negative credit information can only remain on your report for seven years, so if you notice that a 10-year-old charged credit account is still reported, the FCRA gives you the right not only to object to it, but to have the matter investigated right on time.

Conclusion on FCRA

The Fair Credit Reporting Act gives you many protections when it comes to how your credit information is used, reported, and maintained, and it’s important that all American consumers know it. The provisions of the FCRA will likely save you a lot of money, time, and aggravation in the long run, so keep that in mind for the future.

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