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Fair Credit Reporting Act (FCRA)
 Jun 08, 2004


The Fair Credit Reporting Act (FCRA) is designed to protect consumers from incorrect or outdated information on their credit reports. The FCRA helps protect consumers rights. Keep reading to find out more about how the Fair Credit Reporting Act effects you.


Before you can get just about any kind of loan and in some cases before you can get a job or approved for an apartment your credit report will be pulled up. Your credit report is a record of all of your loan-related and credit-related dealings. In some cases it contains other information, such as judgments against you or information about utility bills or other obligation that you have missed payments on.

Your credit report is used to decide whether you will have access to certain types of credit, and to determine what sorts of interest rates and other quotes you receive. Therefore, it is important to ensure that the information in your credit file is accurate and up-to-date. This is where the Fair Credit Reporting Act (FCRA) comes in. It is a piece of legislation designed to protect consumers from credit agencies that may have out of date or erroneous information.

Protections under the FCRA

You have some very specific rights and protections under the Fair Credit Reporting Act. First of all, you have a right to look at your credit report. Secondly, you have the right to dispute information and to require that mistakes be fixed in a timely fashion.

The right to view your credit report

Having access to your credit report is a very important part of properly managing your finances. That is why there laws that ensure you can access your credit report three different ways:

  1. Free credit report each year. Every year, you are entitled to a free copy of your credit report. You get one report from each of the three major credit bureaus. You can choose to get them all at once, or you can choose to stagger them throughout the year. You can go to www.annualcreditreport.com in order to view your free report.
  2. Free credit report when you are denied. If you are denied credit, the company that denied your application has to let you know which of the three major credit bureaus was consulted in the decision. You are then provided with an address. You have 60 days to contact the credit bureau and ask for a credit report. This can be a great way to see why you might have been rejected at no cost to you.
  3. Purchase your credit report for a reasonable fee. You can also view your credit report, anytime you want, for a reasonable fee. Each of the three major credit bureaus charge between $15 and $25 for your credit report. In many cases, it is possible to get a three in one credit report that shows you all three of your reports for easy comparison.

You should note that your credit score is not included in this. You do not get a free copy of your credit score, and your credit score is not included in the price of your credit report. You usually have to pay extra if you want to view your credit score.

Ensuring that your credit report is accurate

If you are regularly checking your credit report, you will be more likely to catch mistakes and outdated information. When you do see information that should be corrected, you have the right to dispute the report. You do this by either calling, writing or filing a dispute online. You let the credit bureau know what the problem is, and you can even contact the company that reported the issue.

By law, anytime you file a dispute, the credit bureau has to investigate and it has to be a timely investigation. If it turns out that there is really a mistake, the problem must fixed as soon as possible. If the company does the investigation and concludes that no mistake was made, then things remain the same. You do, however, have the right to submit a summary explanation to be included with your credit report. This is your side of the story.

Getting rid of outdated information on your credit report

According to the Fair Credit Reporting Act (FCRA), the information in your credit report has to be timely. For most transactions, that means three to five years. A credit reporting agency can't keep late payment information in your report for seven years. Instead, the information must be cycled of your report. This is important, because it reflects your current behaviors, and does not leave you at the mercy of past indiscretions.

The exceptions to this are judgments and tax liens, which can be on for seven years, and bankruptcies, which can remain on your credit report for up to 10 years.

Know your rights under the FCRA, and make sure you are keeping tabs on your credit report. For more information on your rights as a consumer, visit the Federal Trade Commission Web site at www.ftc.gov.



Related Article: Equal Credit Opportunity Act (ECOA) >>



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