What is the Fair Credit Reporting Act?

The Fair Credit Reporting Act (FCRA) is a federal law that regulates the activities of credit reporting bureaus. Private credit reporting bureaus, such as TRW Information Services, Equifax Credit Information Services, and Trans Union Credit Information Company, maintain records of financial payment histories, public record data, such as unlawful detainer (eviction) actions taken against you, or money judgments entered against you, along with personal identification information. Credit reporting bureaus sell the information to creditors so the creditors can make decisions about whether or not to offer you credit.

The FCRA punishes unauthorized persons who obtain credit reports, as well as employees of credit reporting bureaus who furnish credit reports to unauthorized persons. The act also specifies responsibilities of those supplying the reporting bureaus with information.

If the information about you from a credit reporting bureau is all good, there's no need to worry about it. You should be able to obtain credit to purchase goods and services, rent an apartment, obtain a home mortgage loan, apply for insurance, and even obtain employment.

Negative information on file with credit reporting bureaus may be used against you to deny you credit, employment, or even the ability to rent an apartment. It is a good idea to check your credit reports on an annual basis, so that you know what creditors are being told before the information is disclosed to them. Credit reporting bureaus are allowed to charge you a reasonable fee to obtain a copy of your credit report in this situation.

When credit is denied to you based upon information obtained from a credit reporting bureau, the creditor must provide you with the credit reporting bureaus' name and address. If you request (by telephone, mail or in person) a copy of your credit report from the credit reporting bureau within thirty days of the denial, the bureau must send your credit report to you for free, including the names of creditors who have provided the information to the bureau, and the names of everyone who has received a credit report on you in the last six months, or an employment report in the last two years.

If the information provided in a credit report turns out to be inaccurate and corrections are made or the consumer inserts an explanation, the credit reporting bureau must notify the recent recipients of information (as specified by the consumer) of the corrections or explanation.

The FTC Bureau of Consumer Protection must delete information about events that happened more than 7 years before from a report (or 10 years in case of bankruptcies).