What is the Fair Credit Reporting Act?

The Fair Credit Reporting Act is a law in the United States which governs the way in which information about consumer credit can be collected, distributed, and used. The first version of this law was passed in 1970 in response to growing consumer concerns about the use and abuse of credit information, and it has been amended and altered on several occasions since. The goal of the Fair Credit Reporting Act is to protect consumers from abuse of their credit histories, and to provide avenues of redress when inaccurate information is reported or retained.

Under this Act, consumer reporting agencies (CRAs) such as credit bureaus have certain responsibilities. For example, they must provide consumers with copies of their files upon request, and they must be willing to negotiate when a consumer disputes an item on a credit record. Negative information such as reports of bankruptcies may only stay on a credit report for a set period of time, and the credit agency must take steps to preserve the safety of the consumer's identity and financial information.


Consumers can access their credit reports at any time, and as of 2003, they are can have a free credit report every year from one of the main three credit bureaus. Other people cannot access a consumer's credit information without explicit consent, under the terms of the Fair Credit Reporting Act. If credit or services are denied to a consumer because of his or her credit history, the consumer is entitled to know which credit bureau was used for information, and to a free copy of the credit report.

The Federal Trade Commission is responsible for enforcing the Fair Credit Reporting Act, and for providing information about it to consumers upon request. FTC officials are also consulted when amendments and changes to the Act are being considered by Congress, so that they can provide input which may be useful in reformulation of the law. The FTC is also responsible for tracking important trends which could have a bearing on the Fair Credit Reporting Act, such as the rise in identity theft.

When consumers identify information which they believe is erroneous, they are permitted to file a dispute with the CRA distributing that information, along with documentation to support the dispute. The CRA is obliged to remove the information if it is clearly erroneous. If the CRA opts not to remove the information, consumers can request that a copy of their dispute be kept on file with the credit report and sent out to people who request information about that consumer's credit history, so that the dispute will be considered when the consumers credit worthiness is evaluated. Consumers involved in protracted disputes over identity theft may find it necessary to have several disputes on file until the issue can be resolved.



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