Fair Credit Reporting Act - Overview
What is the FCRA?
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What is the Fair Credit Reporting Act?
The Fair Credit Reporting Act protects consumers (not businesses) by regulating the accuracy, fairness, and privacy of consumer information reported to or held by consumer reporting agencies. It protects consumers from the negative consequences associated with inaccurate information in their personal credit reports. The FCRA regulates each stage of the credit reporting process, including collection of information, reporting of that information to credit agencies, dissemination of credit information, and use of a consumers credit information (such as in extending new credit). The Act applies to anyone who prepares or uses a credit report in connection with extending credit, selling insurance, or hiring or firing an employee.
Next Article: Fair Credit Reporting Act - Users of Information Back to: CONSUMER PROTECTION
How Does the Fair Credit Reporting Act Work?
The Federal Trade Commission, and Consumer Financial Protection Bureau, developed by FCRA, oversee and implement the Act provisions. The FCRA is in U.S. Code Title 15, Section 1681. The primary provisions include: Obtaining Credit Reports - Section 604 of the FCRA states that the permissible purposes for obtaining consumer credit reports. The reasons include: Review of credit info for credit application, Background checks or the consumers request for the same. Other: court order, child support and business dealings. Reporting Standards for Credit Information - The FCRA also imposes standards for determining the validity of credit information on credit reports as well as the nature of information. It established a trade line for consumers credit account with reporting agencies. The trade line records the consumers info reported by a creditors and other information about child support liability, tax liability, and bankruptcy. Duration of Consumer Information - The FCRA established the length of time that negative credit information can remain in an individuals record. Some reported elements are releases after a short time, while ore extreme elements remain on report for 7 years, or even 10 years, like in the case of bankruptcy. The FCRA gives consumers the right to: Know their files content Have free of cost file disclosure once a year from all key credit bureaus Have report accuracy determined for employment purpose Notification for file issuance File dispute to correct incorrect or incomplete info Request removal of old negative info
Note: The FCRA was amended in 2003 (by the Fair and Accurate Credit Transaction Act) to allow consumers to receive one copy of their credit reports each year from each credit reporting agency. It also established rules for credit reporting agencies and businesses to increase identity theft protections. These provisions include placing fraud alerts on credit reports, truncation of debit and credit card numbers, secure disposal of consumer information, etc.
Example: You walk into my store and ask to finance the purchase of a large piece of machinery that I sell. I may request authorization to request your credit report. My request and use of this credit report in my decision of whether to extend you credit will be governed by the FCRA.
- Consumer Protection Law (Intro)
- What is consumer protection law?
- Cooling Off Rule
- What major federal laws protect consumers?
- What is the Federal Trade Commission
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Unfair Trade Practices
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- Consumer Financial Protection Bureau
- What is the Fair Credit Reporting Act?
- Users of Information?
- Credit Reporting Agency Consumers
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- Truth in Lending Act
- Fair Debt Collection Practices Act
- Fair Credit Billing Act
- Electronic Funds Transfer Act
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Consumer Financial Protection Act
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- Personally Identifiable Information
- Right to Financial Privacy Act of 1978 (RFPA)
- Electronic Communication Privacy Act of 1986 (ECPA)
- Childrens Online Privacy Protection Act of 1986 (COPPA)
- CAN SPAM Act
- What role do states play in Consumer Protection?