Credit Basics
Your Rights
Fair Credit Reporting Act became law
on
April 25, 1971 and was passed to grant privacy, protect consumers from incorrect
credit reporting to credit bureaus, and insure Consumer Reporting Agencies adopt
fair procedures for acquiring, maintaining, and giving information about consumers.
The Fair Credit Reporting Act permits consumers
to write a limited explanation in their credit report and provides for elimination
of outdated information after 7 years. Certain types of information may remain on
credit reports longer, for example Chapter 7 bankruptcy and judgments.
Credit reporting agency subscribers, comprised of
banks and merchants, etc., may not access an individual's credit record unless authorized.
This authorization is standard procedure when you sign credit and loan applications,
life insurance applications, employment applications, security clearance requests,
etc. Read the fine-print on the applications for more details.
On September 30, 1996 new changes in the Fair Credit
Reporting Act were made effective and the Congress made the following findings:
The banking system is dependent upon fair and accurate
credit reporting. Inaccurate credit reports directly impair the efficiency of the
banking system, and unfair credit reporting methods undermine the public confidence
which is essential to the continued functioning of the banking system.
An elaborate mechanism has been developed for investigating
and evaluating the credit worthiness, credit standing, credit capacity, character,
and general reputation of consumers. Consumer reporting agencies have assumed a
vital role in assembling and evaluating consumer credit and other information on
consumers.
There is a need to insure that consumer reporting
agencies exercise their grave responsibilities with fairness, impartiality, and
a respect for the consumers right to privacy.
It is the purpose of this amendment to require Consumer
Reporting Agencies use of reasonable procedures for meeting the needs of commerce
for consumer credit, personnel, insurance, and other information in a manner which
is fair and equitable to the consumer, with regard to the confidentiality, accuracy,
relevancy, and proper utilization of such information in accordance with the requirements
of this title.
The benefits of this new law are:
1. It is easier for individuals to find out when
and if their credit report has been used against them. It allows consumers to more
easily contest incorrect information on their report, and enables them to stop their
names from getting on credit card companies marketing lists.
2. The amendment places new accountability on credit
bureaus, companies that use credit reports, and organizations that provide the information
that goes into the reports.
3. The law allows for new privacy defenses. Unauthorized
people will not be able to obtain credit reports and the law places new restraints
on "investigative consumer reports".
4. The new law also addresses issues concerning
the three groups who are most interested in credit reports: credit bureaus, credit
report users, and credit report information suppliers. The following is an summary
of the rights and obligations for each group.
