The Fair Credit Reporting Act (FCRA)

Fair Credit Reporting Act (FCRA), located under Code Title 15 U.S.C of Section 1681, refers to a United States Federal Government Legislation. The legislation fosters the accuracy, privacy, and fairness of consumer expenditure and credit data accumulated by consumer reporting agencies. The agencies generate consumer reports at the individual level.

To ensure the completeness and accuracy of these reports, FCRA provides the required regulation to protect consumers from erroneous negligent, or willful reporting. It governs and regulates the authorized report users, compilers or agencies, and custodians who issue consumer reports to users.

The FCRA regulates customer information gathered and shared by customer reporting agencies. It also prescribes the level of data banks can provide to them.

Fair Credit Reporting Act

History of The Fair Credit Reporting Act

Initially passed in 1970, the Fair Credit Reporting Act (FCRA), alongside the Fair Debt Practices Collection Act (FDPCA), laid the foundation for the United States Consumer Rights Law. The enforcement of FCRA takes place through U.S Federal Trade Commission (FTC), Private Litigants, and Consumer Financial Protection Bureau (CBPB).

Purpose of The Fair Credit Reporting Act

The Act's purpose entails protecting the collection and utilization of consumer information available to authorized users by customer reporting agencies. These users include tenant screeners, medical insurance providers, and credit reference bureaus. The Act specifies the persons or agencies authorized to collect and use consumer data.  The Fair Credit Reporting Act regulates consumer reports' access, compilation, and sharing. Additionally, they provide details on a consumer's bill repayments history and past and current credit. Consequently, the recent credit report shows repayment consistency. It depicts an individual financial status.

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Using The Fair Credit Reporting Act

Consumers use the Act to protect the third-party use of their consumption and credit transaction trail compiled by customer reporting agencies. The Fair Credit Report Act allows consumers to access a free credit report from the agencies and, a website authorized by the Federal government. The Act will enable consumers to verify the current report in circulation. Through the Act, consumers are entitled to a notification on the use of reports by authorized users. These include creditors, insurers, and employers.

In instances where the reports capture questionable data, the Act provides for dispute resolution. It reserves an avenue for customer reporting agencies to correct inaccuracies. It ensures a depiction of your correct financial status. Additionally, the Act allows for deletion and updating of information after seven years. For bankruptcy, the Act provides for an update of consumer information after the lapse of a decade.

The Act allows consumers to reconfirm their reports by requesting a free update. It avails a free update when alerted of adverse action informed by the report or where consumers encounter inaccuracies. Additionally, free reports can be accessed whenidentity theft that requires fraud to be flagged and when utilizing public assistance.

If unsatisfied with the response from the customer reporting agencies, consumers have an option to accelerate their complaint to be addressed by the Federal Consumer Financial Protection Bureau (CFPB).  

Furthermore, the FCRA requires third-party users to adhere to its outlined permissible purposes. Consumers must be alerted upon the decision to effect adverse action informed by the report contents. If a consumer contests the report's contents, the Act requires the user to disclose the agency responsible for the report compilation. It makes it possible to address or challenge the inaccuracies.

Your rights under the Fair Credit Reporting Act

As a consumer, the Fair Credit Reporting Act accords you the following rights:A consumer is entitled to receive an alert if the recipient uses the information to make an unfavorable decision based on the report's status. Additionally, a financial entity is required to notify consumers before submitting a negative report of the default to a credit bureau.

The Act allows consumers to decline access to report requests fronted randomly from unsolicited insurance or credit offers.
Additionally, upon your written consent, bankers, landlords, and insurance providers, authorize access to particular users, including employers. It further protects the extraction of your medical information to inform consumer reports. It prohibits decisions on credit facilities based on a client's medical overview.

The Act requires the consumer reporting agency to investigate the areas of the report you dispute. It follows the correction of inaccuracies or exclusion of anomalies within 30 days.

You can apply a security freeze. It ensures that a consumer reporting agency only releases your report after obtaining your express authorization. The security freeze, which also serves as a fraud alert, suspends approval of loans and services, giving you time to review before signing them off. The fraud alert requires confirmation of your identity before processing any facility.

Undoubtedly, the Act allows you to seek damages in court on violations from users of consumer reports. The extent of compensation depends on whether the breach was effected, willful or negligence. Paties likely to fall prey include unauthorized use of an individual's information to make decisions regarding granting them employment, credit facilities, and rental of properties.

The Fair Credit Reporting Act requirements

The Fair Credit Reporting Act requirements outline the modalities for the use of consumer information by customer reporting agencies. The FCRA  2003 updated version outlines the requirements for consumer report users, furnishers, and consumer reporting agencies. The Act stipulates the requirements as follows:The agency to seek authority before sharing information with third parties. The Act permits disclosure to potential and current employers upon your consent, credit service providers, and legal authorities.

The Act stipulates the agency to report to a customer upon their request for free once a year. Additionally, you have the liberty to request additional reports at a fee. Upon claims of inaccuracy from a customer, the Act requires an agency to investigate and correct or delete. It also provides for customers to opt-out of marketing lists. Additionally, by calling 1-888-5-OPT OUT, customers can instantly opt out. For unfavorable decisions informed by customer reports, the Act requires consumer notification. It also accords them the right to dispute inaccurate credit scores. Additionally, the Act allows the agency a grace period of up to 30 days to effect necessary corrections.

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Violations of the Fair Credit Reporting Act

The Fair Credit Reporting Act acknowledges the vulnerability of consumers occasioned by their financial engagements. These engagements predispose them to violation instances. Consumer Reporting Agencies and creditors have violated the Fair Credit Reporting Act.

Presentation of non-updated reports. Use of ancient reports occurs when a customer's credit status changes but remains un-updated by the customer reporting agency. Common instances arise upon an agency failing to acknowledge a customer account closure, failing to take note of a discharged debt, or failing to update information. Delayed customer report distorts their current bankruptcy status.

Mix up of customer data by the consumer reporting agency. It occurs when the agency mixes names, social security numbers, or customers with similar addresses.

Failure to notify the customer of the use of their report. Instances of failed notification occur when creditors secretly provide customer reporting agencies with negative updates, undisclosed decisions by creditors and employers based on adverse credit ratings, use of inaccurate reports without alerting customers of their right to dispute, and failure to disclose to the customer the agency responsible for compiling their report,

Customer Reporting Agency generating inaccurate reports. It includes not recognizing and updating paid-up debts, miss to acknowledge timely payments of bills, or failing to correct an identity theft previously reported. In 2003 Fair and  Accurate Transaction Act (FACTA) introduced an amendment to FCRA providing an entitlement for customers to access one free report from each credit reporting agency. A study by The Federal Trade Commission in 2015 shows that 23 percent of customers encountered inaccuracy in their credit reports.

A Customer Reporting Agency is resorting to granting unauthorized access to reports. Specifically, the Act stipulates persons' access to customer information. Authorized users include employers upon your consent, landlords, insurance providers, creditors, and utility companies.

Failure to incorporate FCRA guidelines when handling disputes

Users' utilizing reports for impermissible purposes. The Act spells out instances where an employer accesses a report without your prior consent, a creditor discharged on bankruptcy snooping to check on your overall financial status, and other attempts by persons to weigh one financial status with an ulterior motive to file a claim.

Upon falling prey to violations, the remedy available to consumers involves suing the creditor or credit bureau in the Federal or State court for damaged financial well-being. The Fair Credit Reporting Act accomplishes a protective role in the eventuality of breaches in using consumer financial data. It ensures consumers receive alerts on the state of the financial transaction reports. The report provides a basis for the consumers credit rating, which is integral for consumers to access credit on reasonable interest terms.To this end, always check with the State on the applicable version of the Fair Credit Reporting Act or local consumer protection. Some have formulated specific consumer laws