The Fair Credit Reporting Act is a federal law in the United States that standardizes the collection, distribution and use of consumer data. These figures include consumer credit.
The Fair Debt Collection Practices Act works with the Fair Credit Reporting Act to form the foundation of consumer credit rights in the U.S. This act was passed in 1970 and is still being used by the government today and required by the United States Federal Trade Commission as well as private petitioners.
Credit bureaus collect, distribute and used information concerning consumers to evaluate their credit so they can issue credit reports. This information is used for other purposes as well such as employment. A credit report is held in a credit bureaus database. A credit reporting agency must follow guidelines that have been applied under the Fair Credit Reporting Act. These responsibilities include criteria that are meant to keep us all safe.
The first criterion is that the credit bureau must provide a consumer with information that concerns the individual. It goes further than just providing the information, however. They must provide concise and correct information and take steps to insure this information is verified. The credit bureau is also authorized to give one free credit report per year so that a consumer may review the information to make sure there are no disputes.
A credit bureau may not keep negative information on a credit report for more than seven years. This type of information includes tax liens, bankruptcies, judgments and late payments. Some bankruptcies are made an exception and can remain on a credit report for up to ten years.
These guidelines are upheld by the three major credit reporting agencies. The Fair Credit Reporting Act was initially set up to protect consumers and help maintain regulations that would ensure a fair credit report is issued for consumers. This also applies to information furnishers. An information furnisher is any company that gives information to a credit bureau.
Most of the times, such companies may act as creditors, who offer a line of credit or a credit card to consumers. This can also include automobile financing, mortgage institutions and banks. There are a few others that furnish information too such as, municipal or state courts that are issuing judgment reports, bonders and present and past employers.
They must follow guidelines, as well. They must provide accurate information to the credit bureau that is complete. It is also their responsibility to investigate any disputes that a consumer has against them. Their obligation is to correct the error or explain why there is no correction needed within thirty days of receiving the complaint. They are also responsible to notify a consumer about any negative information that is about to be included on their credit report within thirty days.
All of this information can be used in so many different aspect of a consumer’s life. Such entities as insurance agencies, credit card companies and even future employers are privy to this information and may use it before offering jobs, insurance or credit of any kind.
Even those that are checking your credit report have guidelines they must follow. Any such company must inform a consumer when a negative action is taken concerning the information on their credit report. They must also let the consumer know which credit bureau provided the credit report. This will enable them to verify the information and its accuracy, or contest it. These laws are set up to provide a fair and accurate credit system that will benefit everyone.