Michelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring.
Michelle Black ContributorMichelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring.
Written By Michelle Black ContributorMichelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring.
Michelle Black ContributorMichelle Lambright Black, Founder of CreditWriter.com and HerCreditMatters.com, is a leading credit expert and personal finance writer with nearly two decades of experience in the credit industry. She’s an expert on credit reporting, credit scoring.
ContributorUpdated: Jun 28, 2020, 11:21pm
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.
Getty
It probably doesn’t seem fair, but you can’t control who collects information about your credit management habits. There’s not much you can do to control who buys your personal information, either. However, the Fair Credit Reporting Act (FCRA) does provide you with a number of worthwhile protections.
Passed in 1970, it helps make sure your credit reports are fair and accurate, and that your credit information remains at least somewhat private. Below you’ll find a deeper dive into this federal regulation, the rights it gives you and what you can do if you think those rights have been violated.
The FCRA applies to any company that collects and sells data about you to third parties. Such companies, known as consumer reporting agencies, must follow the stipulations of the FCRA.
The three most well-known consumer reporting agencies in the U.S. are Equifax, TransUnion and Experian. Collectively, these companies are known as the three major credit bureaus or credit reporting agencies. Contrary to what many people believe, credit bureaus aren’t government agencies. Rather, they are for-profit, publicly traded companies.
The FCRA also regulates businesses that share your information with consumer reporting agencies. These companies are known as data furnishers, and may include banks, credit unions, credit card issuers, collection agencies and other types of creditors.
In its entirety, the FCRA spans about 100 pages in length. The contents of this federal law (not to mention several amendments that have been passed by Congress over the last 50 years) cover many rules and regulations. These rules pertain to credit reporting, identity theft, the privacy of consumer information and more.
Although it’s not realistic for you to memorize all of the rights that the FCRA affords you, it is helpful to have a basic understanding. Here are some highlights of the most important protections you can enjoy, thanks to the FCRA.
The FCRA gives you the right to access your personal consumer reports, most notably your credit reports from Equifax, TransUnion and Experian. Thanks to an FCRA amendment called the Fair and Accurate Credit Transactions Act (FACTA), you can access these reports free of charge once every 12 months. Through April 2021, the three major credit bureaus are voluntarily giving consumers free weekly credit report access in response to the coronavirus crisis.
It’s easy to claim your three credit reports online by visiting AnnualCreditReport.com.
Free credit reports may also be available to you in the following situations:
Aside from giving you access to your own consumer reports, the FCRA also limits who else is allowed to purchase your personal information. Consumer reporting agencies can only share your data with those who have “permissible purpose” under the FCRA, including:
You can also request a copy of your credit score from a consumer credit reporting agency that creates or distributes them. Unlike credit reports, however, you may need to pay for your credit score if you want to view it.
Remember, a credit score isn’t part of your credit report. It’s a separate, add-on product that evaluates the data in your credit report and assigns a “number grade” based on your level of credit risk. The higher your score, the lower your risk.
There are times where you may be able to get a free copy of your credit score. For example, when you apply for a residential mortgage, the lender may be required to give you a copy of your FICO Score free of charge. There are also a number of credit card issuers and online companies that will give you a free credit score. However, these companies aren’t required to give you a free credit score under the FCRA; they do so on a voluntary basis.
The other catch with credit scores is that you don’t have just one. There are thousands of consumer credit scores that are commercially available. So, the credit score you buy (or access for free) may not be the same score that a lender would use when you apply for financing.
Consumer reporting agencies, especially the major credit bureaus, handle a massive amount of data on a day-to-day basis. The credit bureaus each maintain about 220 million consumer credit files. It should come as no surprise, then, that mistakes happen. According to U.S. PIRG, in fact, 50% of the complaints from the CFPB’s Public Consumer Complaint Database in 2019 centered around consumer credit reports.
The moral of the story? You can’t sit back and assume your credit reports are accurate. Credit reporting mistakes, according to an FTC study, were discovered in 25% of consumer credit reports. However, if you review your credit report and discover inaccurate information, the FCRA does provide you some remedy. You have the right to dispute mistakes you discover on your credit reports.
Not only does the FCRA give you the right to dispute credit reporting errors, it tells the credit bureaus how they must handle such disputes when they receive them:
It’s important to dispute inaccurate or questionable information when you discover it on your credit report. Even if a mistake seems minor, getting it removed could potentially help you improve your credit score.
When you go through unfortunate circumstances or make mistakes and don’t manage your credit obligations well, negative information may end up on your credit reports. A negative credit history can make it difficult or even impossible to earn a good credit score.
On the positive side, however, most negative credit history doesn’t stay on your credit report forever. The FCRA places time limitations that control how long derogatory information can remain on your credit report.
