Take Advantage of the Fair Credit Reporting Act

Although the Fair Credit Reporting Act (FCRA) has been a federal law since 1971, few people take advantage of its benefits or understand what it offers them as borrowers. The goal of the FCRA is to connect consumers with accurate credit information when they want it. Creditors and insurance companies use your credit report to make key decisions about your financial life. Use the FCRA to examine your report – and remove any errors that may arise.

Basics of the FCRA

The FCRA limits what kind of organizations can access your credit report: Only those with a permissible purpose, such as qualifying you for a loan, can see it. Credit reports gather information such as your name, Social Security number, addresses, income, financial history, and the value of your possessions. If anyone uses this credit report information against you (legally), you must be notified of the action.

The FCRA guarantees you can review this information yourself – you just have to order a credit report on your own. You are limited to one report every 12 months, but it is free, so do not fall for any online scams that make you pay for a credit report.

The three credit reporting agencies are Equifax, Experian, and TransUnion. They all produce the same report and anyone can be contacted for more information. As the FCRA has evolved in the 2000s, more legislation had been added to help consumers limit information that lenders see, protect their identities more easily, and keep track of financial information.

Tips on Receiving Your Free Credit Report

While you can call one of the three bureaus directly and ask for a free report, using the online system is more effective. The bureaus will be willing to help you, but together they have created a site especially designed to help you order a free report: AnnualCreditReport.com. You can also use this website to find more information on setting a Fraud Alert on your credit report if you have been the victim of identity theft. This alert freezes all credit report processes for a certain length of time, giving you a few months to deal with a fraud situation.

Finding Errors on Your Credit Report

When you order and examine your credit report, you may notice errors in the details. This is one reason ordering and carefully reviewing your report is important. Accuracy can be a problem when data is drawn from so many sources, and credit report agencies are more than capable of making mistakes. When you read your credit report, really read it – go through the numbers instead of simply paying attention to the score. Make sure you have bank account numbers, loan documents, and tax forms at hand to compare the credit report with information you know is accurate.

If you notice an error, the FCRA provides you with a clear method to deal with it so that future lenders are not misinformed. Follow the guidelines closely and document all communication as you begin to correct the mistakes.

Dealing With Credit Errors

The credit agencies will investigate errors free of charge if you call or contact them. Equifax has an online portal to request an investigation and check the status of a current investigation. The other agencies offer similar services, as well as numbers and addresses for dealing with errors. When you begin, include copies of official documents that provide accurate information which clearly shows the errors in the report, and document all conversations with the credit bureaus.

Credit agencies must investigate serious claims within 30 days. Credit reporting agencies must also send notifications to anyone who has received your credit report within the last six months…as long as you request it. However, be patient when contacting credit bureaus directly, since it may be difficult to get updates. The status checkers available online may be better options than a phone call to a customer service operator.

Additional Resources

These are just a few popular ways you can use the FCRA to your advantage. To find out more, look into more in-depth resources, such as:

FTC: A Summary of Your Rights Under the Fair Credit Reporting Act

FTC: Complaint Assistant

Investopedia: Fair Credit Reporting Act and Links