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Know Your Credit Rights Under Federal Law

As most people know, there are three major companies that maintain credit information on individuals: Experian, Equifax, and TransUnion.  These companies amass all sorts of information about you and your financial health and creditworthiness, information that can make your life easy, or hard.

This information is being used in more and more situations in your life besides applications for credit.  Employers use them as part of the hiring process, along with insurance companies (especially on auto policies). Therefore, it is important to know not only what creditors are saying about you, but your rights under the law as to these reports.

Your Credit Rights

Your rights regarding credit are set forth under federal law, more specifically the Fair Credit Reporting Act (FCRA).  This law is intended to “keep ‘em honest” when it comes to the Big Three credit bureaus I mentioned.

They must follow its guidelines to ensure that they furnish correct and complete information to businesses to use when evaluating your application.  It also sets forth certain rights for you, as an individual, as to this information.

First and foremost, you have the right to receive a copy of your credit report from each of these agencies at no charge once a year.  The copy of your report must contain all of the information in your file at the time of your request.  It is also free if

  • a person has taken adverse action against you because of information in your credit report (such as deny you credit, a job, or insurance coverage).  However, you must request the report within 60 days of receiving the notice of denial;
  • you are the victim of identify theft and place a fraud alert in your file;
  • your file contains inaccurate information as a result of fraud;
  • you are on public assistance;
  • you are unemployed but expect to apply for employment within 60 days.

Don’t know which of the three reports was consulted?  Well, the entity that denied you credit is obligated to provide you with the name, address, and phone number of the credit bureau they used.  You are also entitled to know your credit scores (also known as FICO Scores), but there is a fee for that.

Second, you have a right to know who is looking at your credit.  You can go back one full year from the date of your request for most purposes, but you can go back two years if it is specifically for employment purposes.

Third, you have certain rights if you do not believe the information about you is complete and/or accurate.  You have the right to file a dispute with the credit bureau and with the company that furnished the information to the bureau. Once this happens, both the credit bureau and the furnisher of information are legally obligated to investigate your dispute.  See my article on correcting errors to your credit report.

Inaccurate, incomplete or unverifiable information must be removed or corrected, usually within 30 days. However, a consumer reporting agency may continue to report information it has verified as accurate. If you are not satisfied with the resolution of your dispute, you can still add a summary explanation of said dispute to your credit report.

Fourth, you have a right not to be haunted by credit items for the rest of your life.  Entries on credit reports have a "shelf life."  In most cases, a consumer reporting agency may not report negative information that is more than seven years old, or bankruptcies that are more than 10 years old.

Fifth, you have a right to limit access to your credit information.  A consumer reporting agency may provide information about you only to people with a valid need -- usually to consider an application with a creditor, insurer, employer, landlord, or other business.

These needs are specified under the law. Regarding employers or potential employers, you must give your consent for reports to be provided (with the exception of the trucking industry).

Finally, you have a right to sue for damages if your rights under the FCRA are violated.  If you think this has happened to you, you should consult with an attorney as soon as possible.

With credit and credit scores more and more intertwined into our lives, it is very important that we know our rights, what our scores are, whether the information is complete and accurate, and what we can do to be sure we have the best scores/histories possible to have a better life.