How the Fair Credit Reporting Act (FCRA) Helps Consumers

The Fair Credit Reporting Act (FCRA) is a federal law to ensure the accuracy, fairness, and privacy of the information in consumer credit bureau files. The law regulates how credit reporting agencies collect, access, use, and share the data collected in consumer reports.

Understanding the Purpose of the Fair Credit Reporting Act

Information on consumers is constantly being gathered, not just by the three major consumer credit bureaus (Experian, TransUnion, Equifax), but also other organizations that may collect and use your information. For instance, banks and credit unions may use information from your credit history to determine where to approve a loan in your name. Whenever people apply for credit cards, car loans, mortgage loans, or any other form of credit, the issuing company checks the applicant’s credit history to assess their creditworthiness. The terms people are offered often are based on the credit score and information within the individuals’ credit report.

Credit history affects more than just the ability to get loans and the annual percentage rate (APR) on credit cards. Additionally, prospective landlords could check credit reports to determine whether they can trust the applicant to pay rent on time. In other cases, employers may check credit history for hiring purposes. Insurance companies may also check credit history when determining what coverage rates to offer.

It’s because of the vital role that credit history plays in people’s lives that the Fair Credit Reporting Act is in place to protect the rights of consumers.

Ways That the Fair Credit Reporting Act Helps Consumers

The FCRA protects consumers by regulating how information may be used and accessed in consumer reports. Below are critical aspects of the law that help protect consumers.

Application Denials

The FCRA gives consumers the right to know when their credit file is used against them to deny applications for credit, employment, or insurance. This information is usually provided automatically by the rejecting company, but you can also request this information from them if it is not provided immediately.

File Disclosure

The FCRA gives consumers the right to request and access all information a reporting agency has on them. This is known as file disclosure. Consumers can get one free file disclosure every 12 months from each national credit bureau.

Credit Report Permissions

The FCRA gives consumers access to their credit reports but restricts other access. Access is generally limited to individuals with a “permissible purpose,” such as landlords, creditors, and insurance companies. In order for employers to see someone’s credit report, they must have written consent and meet FCRA requirements. Not all states allow employers to access the applicant’s credit background check.

Credit Report Disputes

If there is inaccurate or incomplete information on a consumer’s credit report, they have the right to dispute. The credit bureau will then contact the data furnisher to confirm the accuracy of the information.

Security Freeze

The FCRA gives consumers the ability to put a security freeze on their credit report, ensuring that potential lenders cannot check their report without the consumer first lifting the freeze or providing the specific lender with access.

It’s important that consumers know that in addition to the FCRA laws, individual states may have their own laws regulating consumer credit reporting.

Contact Our Experienced Florida Consumer Protection Lawyer

Attorney Jibrael S. Hindi of The Law Office of Jibrael S. Hindi has dedicated his legal career to protecting consumer rights. If you believe that a credit reporting agency has violated your rights, our collection harassment lawyer can help you understand how to pursue justice. Our firm believes in helping consumers resolve issues with credit reporting agencies, creditors, retailers, and other companies. When you work with Attorney Jibrael S. Hindi, you do not pay a dime unless you get paid. Contact our firm today by calling (844) 542-7235 or filling out our contact form.