What Every Consumer Should Know About the Fair Credit Reporting Act

By on July 26, 2016

A credit report has monumental impact on the lives of consumers.  No longer just for for credit checks, reports have become part of routine background checks used by employers, and potential landlords. Rightly or wrongly we are judged by our credit reports, and our credit reports are compiled and kept primarily by three for-profit companies: Equifax, Transunion and Experian.

The Fair Credit Reporting Act is a federal law that protects consumers from credit reporting abuses by promoting the accuracy, fairness, and privacy of information in credit reports. The following are among the most important protections (this is not an exclusive list):

  • You must give your express, written consent for reports to be provided to employers or potential employers. It’s common for prospective employers to run a credit check on job seekers.  But employers must obtain specific written consent first. If they do not, they can be sued under the Fair Credit Reporting Act, which provides for actual damages or a minimum of $100 to a maximum of $1,000 per violation.
  • You must be told if information in your credit file has been used against you. Anyone who denies an application for credit, insurance or employment must tell you they’ve done so, and must give you the name, address, and phone number of the agency that provided the information.
  • You have the right to know what is in your file. You are entitled to one free credit report per year, accessible at:   www.annualcreditreport.com  Additional reports can be bought from the agencies. A credit score may not be part of your credit report, but can be obtained from the agencies for a fee.
  • You have the right to dispute inaccurate information, including incomplete information in your credit file.The credit agency must investigate such complaints and correct any errors within certain time frames.
  • Access to your file by others is limited to certain approved purposes.  Most commonly applications for credit, insurance and employment.  As noted, employment use requires express written consent.

In addition, state law often provides additional protections and regulations, and you should familiarize yourself with those as well.