What is the Fair Credit Reporting Act?

Information on customers, such as credit history, is gathered and used by a number of companies. This includes the three main consumer credit agencies: Experian, Equifax, and TransUnion. 

Credit score ratings vary in value and can either provide a person the opportunity to make large investments or exclude them from receiving credit. Financial institutions use this information to decide whether to approve or reject a consumer’s request depending on their credit history. 

Consumers have a right to understand how their credit score is being used under the Fair Credit Reporting Act (FCRA). The FCRA  guarantees the accuracy, impartiality, and security of the information in bureau files. This federal law also regulates how consumer report data is gathered, accessed, used and shared by credit reporting organizations. 

Who has access to consumer credit scores? 

While securing low-interest loans and credit cards is often the aim for many consumers, other organizations may look at the score to assess trustworthiness.

Landlords, for instance, could use this information to determine whether a tenant would pay rent on time. When choosing new hires, some states permit firms to access credit records. Even some insurance carriers use the score to determine who is eligible for coverage.

Is the information accurate? 

Creditors collecting on past-due accounts can get accurate information from the FCRA. Most people pursuing outstanding debts are under the assumption that consumer data is accurate. Mistakes do happen, consumers may have out-of-date and inaccurate information, which can create issues for agencies. 

Debt collectors may have difficulties collecting on debts when the consumer information isn’t accurate. When this happens, it may be best to learn about your legal options.

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