How the Fair Credit Reporting Act Works

Having a good credit score helps consumers in Minnesota financially by increasing chances of loan approval and better rates. However, any errors on a credit report may get them denied or higher interest rates. The Fair Credit Reporting Act gives consumers protection by allowing them to view their credit reports.

Basics of the Fair Credit Reporting Act

In addition to loan denials, a poor credit score could get the applicant denied for insurance, real estate rentals and jobs. Errors can not always be avoided given all the data that agencies have to keep up with, but most of the denials get caused by misinformation or outdated information.

Lenders or credit card companies commonly use details of a credit report to determine a consumer’s creditworthiness to deny or accept an application. However, an employer or landlord may need written permission from the applicant to view a report. The Fair Credit Reporting Act that Congress passed in 1970 gives consumers the right to know what information made the employer, lender or insurance agency deny them.

What the FCRA requires

Much of the information from credit reports comes from the three major credit bureaus, and they must report accurately under the FCRA. The law requires the agencies to give consumers free access to credit reports once per year and report and investigate false information.

A consumer may be entitled to a free credit report more than once annually from the agency in certain cases. This includes welfare recipients, victims of ID theft, and cases where a person or business used the negative mark against them. The agency has 30 days to delete or update the errors within 30 days of a dispute. Agencies must also allow consumers to opt out of pre-screened credit offers and security freezes on reports.

A credit bureau can reject cases of Fair Credit Reporting Act (FCRA) violations they think are fraudulent. A consumers who feels their complaint got unfairly rejected may consult an attorney.