Understanding the Fair Credit Reporting Act: Know Your Consumer Rights
I lead the Consumer Finance practice at our firm. Practice areas are: credit reporting errors, background check errors, deceased reporting etc.
The companies that track your financial activity, compile your financial data, prepare reports that distill that data, and then sell that report to lenders are bound by a federal law called the Fair Credit Reporting Act (FCRA). The FCRA establishes the rules and the enforcement mechanisms for how the CRAs collect your credit information, use it, share it, and respond to you when you exercise your rights. The FCRA lawyers at Consumer Attorneys want you to know those rights.
What Is the Fair Credit Reporting Act?
The FCRA, passed in 1970 as America was on the cusp of a credit explosion, governs how CRAs (the “big three” are Equifax, Experian, and TransUnion) handle your personal and financial data. These CRAs collect and compile data to create credit reports, which lenders, landlords, insurance companies, and employers might use when making decisions about you. The FCRA and an amendment called the Fair and Accurate Credit Transactions Act of 2003 (FACTA), lay out clear rules that protect your privacy, prevent abuse, and give you control over your credit information.
Your Right to Access Your Credit Report
You have the right to access your credit report. You’re entitled to a free credit report from each major credit reporting agency once a year, a practice that has since evolved to provide one free copy of your credit report per week. You can get this by visiting the AnnualCreditReport.com, or the websites of the big three CRAs.
The Right to Dispute Inaccurate Information
A 2021 study by the Consumer Financial Protection Bureau (CFPB) found that about one in five Americans had an error on at least one of their credit reports. Whether it's a misspelled name, an outdated address, or even accounts that don’t belong to you, these errors can impact your credit score and financial future. If you spot a mistake, you have the right to dispute it, and the credit agency must investigate the issue within 30 days.
Errors on your credit report can cost you more than just a few points on your credit score—they can mean the difference between being approved or denied for a loan, a mortgage, or even a job. The FCRA allows you to dispute inaccurate, incomplete, or unverifiable information on your credit report.
The Right to Notice of Adverse Action
The FCRA requires that you be notified when someone takes an adverse action from what they saw in your credit report. FACTA requires that a creditor notify a consumer when it offers her credit terms that are “materially less favorable than the most favorable terms available to a substantial proportion of consumers.”
The Right to Limit Who Sees Your Credit Report
Not everyone can access your credit report. The FCRA sets limits on who can see your credit history and why. Only companies with legitimate needs - like lenders, landlords, and employers - can access your credit report.
Your Right to Financial Privacy
Beyond credit information, the FCRA also protects your privacy. The agencies that gather your data must take reasonable steps to secure it. If your personal information is compromised through a data breach or improper handling, you can seek compensation for any damages.
This right to privacy also means that your information can’t be shared without your consent, except under specific circumstances outlined by law.
Right to Sue
If a CRA of any size or an organization that has access to your credit report violates your rights, you have the right to sue. In many cases, the FCRA allows you to recover actual damages (such as lost wages or loan denials), statutory damages, and attorney fees. This means you may not have to pay for legal help up front, as the credit reporting agency could be responsible for your legal fees if you win your case.
How an FCRA Lawyer Can Help You
If anyone violates your rights under the FCRA, working with an FCRA attorney lawyer is one of your best steps. Navigating the legal complexities of credit reports, disputes, and privacy concerns can be overwhelming, especially when dealing with corporations with vast resources and teams of attorneys.
Your rights under the Fair Credit Reporting Act are powerful tools that can protect your financial future. But knowing your rights is just the first step. But acting quickly is critical. Don’t wait for the check engine light to come on!