There is a federal law that governs nearly every decision made about your credit, and most people could not tell you what it says. Having the FCRA requirements explained clearly can protect you.
The Fair Credit Reporting Act dictates how your credit information is collected, who is allowed to access it, how long negative items can stay on your report, and what you can do when the information is wrong.
What the FCRA Requirements Explained in Plain Terms
The FCRA requirements come down to one core principle: consumer credit information must be collected, stored, and shared accurately and fairly. The law governs consumer reporting agencies (CRAs), which include the three major credit bureaus (Equifax, Experian, and TransUnion). It also includes specialty agencies that track information such as rental history and check-writing behavior.
Under the FCRA, you have the right to access all the information a CRA has on file about you (though that does not necessarily include credit scores). You can get a free report from each of the three major bureaus each week at AnnualCreditReport.com. Reviewing yours regularly is one of the simplest ways to catch problems before they cause real damage.
Who Can Pull Your Credit Report and When
Not just anyone can access your credit report. The FCRA limits access to parties with a “permissible purpose.” Creditors, landlords, insurance companies, and government agencies can all request your report under specific circumstances tied to a transaction or legitimate business need you initiated.
If a prospective employer pulls your report and takes adverse action based on what they find, federal law requires them to notify you in writing. They have to share a copy of the report and generally give you a chance to address any inaccuracies before a final decision is made.
Anyone who pulls your report without a permissible purpose may be in violation of federal law, and you may have legal recourse.
What the FCRA Says About Errors on Your Report
Credit report errors are more common than most people realize. Accounts that don’t belong to you, inaccurate payment histories, and outdated negative information can all appear on a report and cause real financial harm.
The FCRA gives consumers the ability to dispute inaccurate information directly with the credit bureau. Here is how the dispute process generally works:
- Submit a written dispute to the bureau, including documentation that supports your position
- The bureau generally has 30 days to investigate and respond
- If the information cannot be verified, the bureau must remove it
- If the bureau verifies the disputed item as accurate, it stays on your report
This last point is where things get complicated. A bureau verifying information does not automatically mean the information is correct. Furnishers, the companies that report data to the bureaus, also carry legal obligations under the FCRA to investigate disputes and correct inaccurate data they have submitted. When they fail to do that, it can become a legal matter.
Negative Information Has a Time Limit
The FCRA places limits on how long negative information can remain on your report. Most adverse items, including late payments, collections, and civil judgments, must be removed after seven years (although civil judgments an remain longer if the relevant statute of limitations period is longer). Bankruptcy can last up to 10 years.
When a Dispute Alone Is Not Enough
At Sherman & Ticchio PLLC, we work with New York consumers who have gone through the dispute process and found that the error remains on their report. At that point, the question becomes whether a violation of the FCRA has occurred and what legal options may be available.
Consumers who have suffered harm from a credit reporting violation (such as a denied loan, a lost job opportunity, significant emotional distress or significant financial stress) may be entitled to compensation.
Your Credit Report Deserves Accurate Information
Understanding the FCRA is a starting point, not a finish line. If you have found an error on your report that has not been resolved through the dispute process, speaking with an attorney can help you understand your options. Contact Sherman & Ticchio PLLC to discuss what you are dealing with and how federal law may apply to your situation.