What Is the Fair Credit Reporting Act? The 5 Things You Need to Know
The Fair Credit Reporting Act protects the information collected by major credit bureaus and determines how that information can be used and accessed. It also ensures that information is reported fairly to consumers so that they will know if anything has been added to their reports inaccurately and unfairly.
What is the Fair Credit Reporting Act, and how does it impact you? There are several key things you may need to know.
1. The Fair Credit Reporting Act allows you access to your credit report and other critical information.
Under the Fair Credit Reporting Act, you can access your credit report and the associated information at any time. If companies can report or view that information about you, you can access that information yourself, whether to double-check its accuracy or to see what might prevent you from taking out a loan or securing a rental agreement.
2. The Fair Credit Reporting Act governs who else can access your credit report and other consumer report information.
Under the Fair Credit Reporting Act, while you have full access to that information, other entities may not. This legislation restricts access to those who have a reason to access it: landlords, lenders, and insurance companies, for example. In some cases, your employer or others may have the right to access the information contained in your reports, but you will need to give permission for those entities to access those reports. Without your permission, they cannot access them.
3. You have the right to know if information from your credit report is used to deny a request.
A landlord pulls your credit report and discovers that you have a habit of failing to pay your rent on time, or even a significant history of past evictions. That landlord might then decide not to rent to you on the basis of that information. A lender pulls your credit report and discovers that you have taken out a larger number of loans than you should recently, that you have a recent bankruptcy in your financial history, or that you regularly fail to pay your bills on time, so the lender decides not to move forward with a loan that you need. If information from your credit report is used to deny a request, including a request for a loan or tenancy, you have the right to know what that information was.
4. You can dispute inaccurate information on your credit report.
Sometimes, information is added to your credit report in error. You might have just barely made a payment on time, but the company might have already submitted information about the late payments. You might have made payments that the company failed to document. In some cases, you may even have inaccurate debts on your credit report. If you notice inaccurate information on your credit report when you access it each year, you may need to dispute that information. Talk to a lawyer about how to best dispute it in order to ensure a fair resolution.
5. You can put a freeze on your credit report that will prevent anyone from accessing it without your consent.
If you place a freeze on your credit report, lenders can only access it in one of two ways. First, they can access it if you lift the freeze, permitting lenders and others to access it again in general–a step you might take if, for example, you were preparing to purchase a home and knew that you wanted to get the best deal, and so might find yourself shopping around for the best lender. You might also allow lenders to access your credit report by providing them with a one-time PIN that will provide short-term access. These simple strategies can help ensure that you know who is accessing your credit report and when, and may also prevent unauthorized activity.
6. In some states, employers can access your credit report (but they have to ask for permission).
In some states, employers can use information from your credit report to determine whether they want to hire you. This practice is much more popular in situations where you might deal with finances on a regular basis. However, before an employer can do it, you will need to give your permission.
The Fair Credit Reporting Act is designed to protect you, as a consumer. In today’s fast-paced financial world, a number of things can depend on your credit history and report, from your ability to rent a property to your ability to secure a much-needed loan. If you notice inaccurate information on your credit report, you should dispute it as soon as possible. If you need help disputing a transaction or notation on your credit report, you have questions about your rights under the Fair Credit Reporting Act, or you feel that information from your credit report may have been unfairly used to deny you a loan or other benefit that you should have received, contact a consumer lawyer as soon as possible.
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