In 1970 Congress enacted a federal law to protect consumers from inaccuracies on their credit reports. This law is known as the Fair Credit Reporting Act or the FCRA and it was passed to protect consumers and promote the fairness, accuracy and privacy of personal information compiled by credit reporting agencies on credit reports.
Credit reporting agencies are companies that are in the business of collecting, compiling and selling information on consumers for the purpose of credit evaluation. The three main credit-reporting agencies are TransUnion, Equifax and Experian.
The FCRA gave consumers the right to dispute and challenge any information found on a credit report on the basis of accuracy and completeness. After a dispute is issued the credit reporting bureaus have 30 to 45 days to verify the ownership and the accuracy of the disputed accounts. If they are not able to provide the verification within the time frame then the disputed information must be deleted from the credit report.
The credit reporting agencies also have other responsibilities under the FCRA. Each year a free credit report must be provided to any consumer who requests one. Before 2003 the consumer had to pay a fee for this report but an amendment in 2003 changed this and now it is provided at no charge. A report must also be provided if the consumer has been denied credit on the basis of what is provided in the report.
Oftentimes when a negative mark is disputed it is removed from the account. Under the FCRA the disputed information cannot be reinstated without contacting the credit bureau contacting the consumer in writing.
Because of the FCRA there is also now a limit as to how long the negative information can stay on a report. Most often it is 7 years from the time of a delinquency but the exception is a bankruptcy, which can remain for 10 years and a tax lien that can remain for 7 years from the time of payoff.
There are estimates that as many as 40% of all disputes are not verified within the time frame. That means that up to 40% of all disputed information must be deleted before it is even checked out. A consumer can use that fact for their own benefit however, consumers must also be aware that fair, accurate and correct information should stay on the report even if it is deemed negative.
The FCRA protects consumers and gives them the right to do whatever is necessary to repair negative and inaccurate credit. Consumers can conduct credit repair on their own or they can also hire a professional that specializes in credit repair. Either way a consumer with credit inaccuracies should take the time to repair his or her credit because they have the right to do so.