The Fair Credit Reporting Act, also referred as FCRA, is a federal law of the United States of America. The act is implemented by the Federal Trade Commission or FTC. The act was introduced with the aim of regulating and maintaining the accuracy of the consumer credit reports in the United States of America. The Fair Credit Reporting Act (FCRA) also ensures the privacy of credit information of consumers. An amendment to the Fair Credit Reporting Act (FCRA), known as Fair and Accurate Credit Transactions Act (FACTA) was passed in 2003.
The Consumer Reporting Agencies or CRAs in the United States of America gather information on consumers who have applied for credit. These CRAs are governed by the Fair Credit Reporting Act (FCRA). Most CRAs are credit bureaus that prepare credit report prepared which includes credit history of the consumers. The credit scores or credit ratings provided by the CRAs are a measure of the creditworthiness of a borrower. The lending organizations get such credit information from the CRAs.
According to the Fair Credit Reporting Act (FCRA), the credit reporting agencies must fulfill certain conditions. These are:
The CRA must inform the consumer about hi/her credit reports, as exists in the files of the concerned CRA.
If a consumer raises dispute regarding some negative information and the negative information has to be removed as a result of the dispute, the CRA cannot put back the same negative information within five days without informing the consumer.
According to the FRCA, negative information related to a consumer cannot be retained beyond a stipulated time period. Negative information may include bankruptcy, late payments or tax liens. Generally this stipulated period is seven years. However, there are certain exceptions, like in the case of bankruptcies it is ten years, while in the case of tax liens the stipulated period is seven years from repayment.
The consumers enjoy a range of rights and benefits under the Fair Credit Reporting Act (FCRA). At the request of a consumer, a CRA has to provide him/her the information contained in his/her file. Furthermore the CRA must provide the list of lending organizations who have requested the credit details of the consumer.
The credit information provided by a CRA may be used to take measures against a consumer, such as rejection of credit application, employment or insurance. In such a case, the individual or organization taking such measure must provide the details of the CRA on whose reports the decision was based.
Furthermore, under the Fair Credit Reporting Act (FCRA), a consumer has the right to dispute inaccurate information provided by a CRA. A CRA is bound to investigate information about a consumer that the consumer claims to be inaccurate. The CRA should provide an investigation report to the concerned consumer once the investigation is complete. Inaccurate or unauthenticated information must be removed from the files of the CRA.
According to the Fair Credit Reporting Act (FCRA), the CRA should maintain confidentiality of credit information. The FCRA has laid down certain stipulations regarding the purposes or which credit information can be divulged to anyone. Access to files of consumers is limited to such purposes as laid own by the Fair Credit Reporting Act (FCRA).