In 1970, the United States government enacted the Federal Credit Reporting Act or the FCRA. This law regulates the collection and dissemination of consumer credit information. It ensures the accuracy, fairness and privacy of personal credit information that is collected by credit reporting agencies. The most recent amendment to the law was in December 2003.
Credit reports are highly utilized in the United States. Originally a credit report was used only to evaluate the creditworthiness of an individual for the purpose of obtaining credit. Now credit reports are used for other things like insurance underwriting and even employment applications. At the current time it is completely legal for an individual to be denied insurance coverage or employment based upon the information contained in a credit report. A person can even be fired from a job based upon credit report information.
Credit reporting agencies collect, compile and sell credit information on consumers. There are three major credit-reporting bureaus in the United States. They are Experian, Equifax and TransUnion.
The FCRA protects consumers from unfair, incomplete and erroneous reporting on a credit report. Under this law a consumer has the right to dispute and challenge any information on a credit report that is inaccurate, incomplete or erroneous in any way.
As a consumer you have the option to issue a dispute to the credit bureaus. After receipt of your dispute letter they will have 30 days in which to either verify the truthfulness of their reporting or to delete it from your account.
The FCRA also provides consumers the right to receive one free credit report each year from each of the credit bureaus. This does not happen automatically but only after a request has been made. You are also entitled to a credit report anytime that you are denied credit based upon the information on the report. Whichever credit bureau of reporting the negative information must provide the report to the consumer upon request.
Negative information on credit reports often gets removed because of disputes. If information is removed because of a dispute, the credit bureau cannot reinstate it on to your report without notifying you in writing.
The FCRA also governs the amount of time that negative information can remain on a credit report. A listing cannot remain longer than 7 years following the delinquency for most items, however, a bankruptcy can remain on the report for 10 years and a tax lien for 7 years after it has been satisfied.
A consumer should take the time to issue a dispute if they have any questionable information on their account because it has been estimated that as many as 40% of all disputes end up getting the information deleted from the report because it could not be verified within the time limit. If the information is negative but truthful and accurate it should not be disputed but should remain on the report for the specified time period.
